Life insurance claims
register major increase
Cashing in policies is primary reason
Gross insurance claims increased two percent in 2020 to $1.1 billion, according to figures released by the Insurance Control Commission. The largest growth was recorded in life insurance claims which jumped 22 percent year-on-year.
Source: Insurance Control Commission, InfoPro
Raymond Cham, CEO of ADIR Insurance, said that the reason for the increase in life claims is that many insured had to surrender (cash in) their policies because it was difficult for them to withdraw their deposits from banks due to the de facto capital controls. Another reason was that they were reluctant to pay the premiums as they don’t consider life insurance as necessary as other insurance coverage, he said. According to Cham, there were not many insured among the victims of the Port Explosion.
Labib Nasr, CEO of Assurex Insurance and Reinsurance, said that changes in life insurance claims normally vary up or down from one year to another. The increase this year could be partly attributed to the rise in mortality due to the Covid-19 pandemic, he said.
Nasr said that the increase in total claims was mainly related to the Port Explosion which includes property and casualty insurance claims as well as hospitalization and motor claims. Insurance companies have provisioned all claims related to the blast as required even if they have not been paid yet.
Cham said that motor claims have declined because the increase in car damages caused by the Port Explosion could not offset the decline in the number and size of car accidents due to the Covid-19 lockdowns.
Written insurance premiums reached $1.56 billion in 2020. This represents a drop of nearly three percent compared with the previous year
Life insurance premiums fell 12 percent to $414 million. Non-life insurance premiums increased by almost one percent to $1.15 billion. Motor insurance premiums rose two percent year-on-year and health premiums four percent. Property and casualty premiums decreased seven percent.
Nasr said that the reason for the decline in life premiums is that buying life policies through banks (bancassurance) has decreased sharply while many insured have also cashed in their bancassurance life policies. All this was because of concerns about the deteriorating conditions of banks or even out of sheer anger at the banks’ application of capital controls, he said.
Cham said that the decline in premiums for property and casualty coverage was due to the fact that many businesses have closed or their activities have slowed down resulting in smaller inventories and consequently a decrease in the value of insured inventories. According to Nasr, the fact that fewer companies have been created in 2020 has also contributed to the decline in property and casualty premiums.
Health insurance accounted for 36 percent of total premiums, followed by life (26 percent) and motor (22 percent).
Bankers Assurance held the largest market share at 9.5 percent followed by Allianz SNA (8.7 percent) and Alico (eight percent).
Date Posted: Mar 24, 2021