Insurance industry records 12.6% GWP growth in first half

The insurance industry was able to achieve a growth of 12.60 percent in terms of overall gross written premium (GWP), during the first half of 2018 (i.e. for the period from 01.01.2018 to 30.06.2018), recording an increase of Rs.9,593 million, when compared to the same period in the year 2017.

The GWP for long-term insurance and general insurance businesses for the first half of 2018 was Rs.85,755 million, compared to the first half of 2017, amounting to Rs.76,162 million, posting a growth of 12.60 percent (first half 2017: 13.87 percent).

The GWP of long-term insurance business amounted to Rs.37,902 million (first half 2017: Rs.33,657 million), recording a growth of 12.61 percent (first half 2017: 11.06 percent). The GWP of general insurance business amounted to Rs.47,853 million (first half 2017: Rs.42,505 million) recording a growth of 12.58 percent (first half 2017: 16.20 percent). (Refer chart 1)

Total assets

The value of total assets of insurance companies has increased to Rs.581,770 million as at end of first half of 2018, when compared to Rs.533,075 million recorded as at end of first half of 2017, reflecting a growth of 9.13 percent (first half 2017: 11.42 percent).

The assets of long-term insurance business amounted to Rs.407,708 million (first half 2017: Rs.375,159 million) indicating a growth rate of 8.68 percent year-on-year. However, the growth of assets of long-term insurance business has significantly dropped compared to 15.93 percent growth recorded during the first half of 2017.

The assets of general insurance business amounted to Rs.174,062 million (first half 2017: Rs.157,915 million) depicting a growth rate of 10.23 percent (first half 2017: 2 percent) at the end of first half of 2018. Accordingly, the growth of assets of general insurance business has shown a significant increase compared to the same period of 2017. (Refer chart 2)

Investment in government securities

At the end of first half of 2018, investment in government debt securities amounted to Rs.176,471 million, representing 47.48 percent (first half 2017: Rs.175,627;51.32 percent) of the total investments of long-term insurance business, while such investment of the total investment of general insurance business amounted to Rs.42,486 million, representing 37.98 percent (first half 2017: Rs.35,972; 35.29 percent).

Accordingly, the total investment of both long-term insurance business and general insurance business in government securities amounted to Rs.218,957 million (first half 2017: Rs.211,599 million). Thus, the investment in government securities of long-term insurance business and general insurance business has increased by 0.48 percent and 18.11 percent, respectively.

Claims incurred by insurance companies

The claims incurred by insurance companies during the first half of 2018 in both long-term insurance business and general insurance business was Rs.38,422 million (first half 2017: Rs.32,249 million) showing an increase in total claims amount by 19.14 percent year-on-year.

The long-term insurance claims, including maturity and death benefits, amounted to Rs.16,104 million (first half 2017: Rs.11,991 million). The claims incurred in general insurance business, including motor, fire, marine and other categories, amounted to Rs.22,318 million (first half 2017: Rs.20,258 million).

Hence, during the first half of 2018, there is an increase in claims incurred by 34.31 percent and 10.17 percent for longterm insurance and general insurance businesses, respectively when compared to the same period in 2017.

The claims incurred in long-term insurance as a percentage of GWP of longterm business is 42 percent, whereas the claims incurred in general insurance as a percentage of GWP of general insurance business is 47 percent. (Refer chart 3)

Profit (before tax) of insurance companies

The profit (before tax) of insurance companies as at end of first half of 2018 in both long-term insurance business and general insurance business amounted to Rs.21,656 million (first half, 2017: Rs.4,660 million) showing an increase in total profit amount by 364.71 percent.

The profit (before tax) of long-term insurance business amounted to Rs.17,319 million (first half 2017: Rs.738 million) while the profit (before tax) of general insurance business amounted to Rs.4,337 million (first half, 2017: Rs.3,992 million). Thus, profit (before tax) of long-term insurance business and general insurance business has increased by 2,246.57 percent and 10.57 percent, respectively.

The increase of 2,246.57 percent in profit (before tax) was mainly due to the profit recorded by an insurer from a sale of its subsidiary and the one-off surplus transfer made by two long-term insurance companies during the period.

Further, a state-owned long-term insurance company reported a growth in profit (before tax) compared to huge loss recorded in the second quarter of 2017. (Refer chart 4)

No. of insurance companies

Out of 26 insurance companies in operation as at June 30, 2018, 12 are engaged in long-term (life) insurance business, 12 companies are carrying out only general insurance business and two are composite companies (dealing in both long-term and general insurance businesses).

Insurance brokering companies

Fifty-nine insurance brokering companies, registered with the Commission as at June 30, 2018, mainly concentrate in general insurance business. The premium income generated through insurance brokering companies in the first half of 2018 with respect to general insurance business amounted to Rs.11,560 million, 13.48 percent of total GWP (first half 2017: Rs.9,915 million; 13.01 percent of total GWP), while the premium income generated with respect to long-term insurance business amounted to Rs.353 million, 0.41 percent of total GWP. (First half 2017: Rs.140 million; 0.18 percent of total GWP).

The total premium income generated through insurance brokering companies with respect to both general insurance and long-term insurance businesses amounted to Rs.11,913 million, 13.89 percent of total GWP, during the first half of 2018, compared to Rs.10,055 million, 13.20 percent of total GWP during the first half of previous year. Thus, the total premium income generated through insurance brokering companies witnessed a growth of 18.47 percent during the first half of 2018, when compared to first half of 2017.