By RACHNA LAL
Fiji’s insurance industry recorded the highest claims payment to date last year as the catastrophic events took their toll on general insurers’ profitability.
These included the two floods in Western Viti Levu and Cyclone Evan.
This has been revealed in the Reserve Bank of Fiji’s 2012 Insurance Annual Report.
Reserve Bank Governor, Barry Whiteside, in the report, revealed the domestic non-life industry for the first time, reported an underwriting loss of $2.8 million.
This, he said, contributed to an industry net loss after tax of $6.1 million.
The total assets of the local insurance industry however noted a growth of 16.4 percent on a consolidated level, with industry solvency surplus recorded at a comfortable $156.5 million in 2012.
Mr Whiteside said increasing severity and frequency of natural disasters are reshaping insurer views of rick, further demonstrating an increased scope for catastrophe modeling to mitigate risks.
“Technology investment to support growth and improve risk management is a strategic necessity,” he said.
Key disclosure statements
Deputy Governor of the Reserve Bank, Inia Naiyaga, in a statement, said 2012 saw the first year of the publication of Key Disclosure Statements of licensed insurers in Fiji.
This, he said, followed the implementation of the Reserve Bank’s Insurance Supervision Policy Statement No. 11 in December 2011.
“These public disclosures are expected to further enhance transparency and comparison of insurer performance across the industry,” he said.
Low interest rates maintained
Mr Whiteside said the interest rates were likely to stay at low levels for the foreseeable future.
He also indicated investment returns were likely to remain weak, compelling non-life insurance providers to improve underwriting margins.
“This will require difficult decisions on pricing,” he said.
Future outlook
The report indicated the domestic insurance industry is expected to recuperate after another year of high losses.
It said an improvement in income is expected as the domestic economy expands.
But Mr Naiyaga said while the outlook for the insurance industry is positive, the prevailing low interest rate environment calls for difficult pricing decisions especially by life insurers as investment returns are likely to remain weak.
“The increasing severity and frequency of natural disasters are reshaping insurer views of risk, necessitating increased technology investment to improve risk management,” he said.
