Overview of Namibia Insurance Market: Insights and Trends

Explore a detailed overview of the Namibia insurance market, including regulatory dynamics, market classification, short-term insurance insights, and underwriting results for the second quarter of 2018. Discover key figures, market shares, growth trends, and insights into the long-term and short-term insurance sectors.

• Namibia insurance
• Market overview
• Regulatory insights
• Short-term insurance
• Underwriting results

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1. AFRICA INSURANCE ORGANISATION 23rdAFRICAN REINSURANCE FORUM An overview of the Namibia Insurance Market Erna Motinga DEPUTY CEO: PRUDENTIAL SUPERVISON Windhoek , Namibia 1 October 2018 | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg

2. CURRENT REGULATORY AMBIT Size of the Regulated Financial Sector (at June 2018) Long-term Insurance Number of intermediaries Micro Lenders (Usury) Short-term Insurance Number of Assets institutions N$ Medical Aid Funds Participation Bonds NAMFISA 580 N$ 288 5 512 (excludes medical aid intermediaries) Stock Exchange Pension Funds billion Friendly Societies Unit Trusts | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg

3. OVERVIEW OF THE INSURANCE MARKET Classification Long-term Short-term Insurers Re-insurer Brokers (incl reinsurance brokers, corporate brokers, and natural persons) Agents 16 15 1 694 523 4 678 972 Total 5 389 1 511 Market Share based on Gross Written Premuim The largest 5 long-term insurers account for approximately 87% of the market The largest 5 short-term insurers account for approximately 90% of the market | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg

4. OVERVIEW OF THE MARKET SHORT TERM INSURANCE 6,589,987 Compound Interest Growth: Assets - 14% 7,000,000 6,232,772 5,769,310 5,586,779 6,000,000 4,749,102 5,000,000 4,230,949 4,152,473 N$ MILLION 3,949,524 3,944,130 3,461,480 3,395,956 4,000,000 2,379,437 3,000,000 2,000,000 Liabilities 12% 1,000,000 - 2013 2014 2015 2016 2017 2018 TOTAL ASSETS TOTAL LIABILITIES LONG TERM INSURANCE 60 54.9 53.9 Compound Interest Growth: Assets 9% 47.6 45.9 50 45.2 44.7 40.7 40.2 38.5 36.4 35.9 40 N$ ' BILLION 32.7 30 Liabilities 7% 20 10 0 2013 2014 2015 2016 2017 2018 TOTAL ASSETS TOTAL LIABILITIES | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg

5. UNDERWRITING RESULTS STI SHORT TERM INSURANCE QUARTER 2 2018 300,000 Net Premiums Earned Underwriting Surplus/(Deficit) 250,000 256,199 200,000 196,496 164,116 150,000 N$ 000 151,199 91,761 100,000 80,311 44,833 50,000 2,502 497 (17,280) (21,869) 821 315 (20,564) - Fire Marine Aviation Vehicles Guarantees Miscellaneous Personal (50,000) CLASS OF INSURANCE | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg

6. UNDERWRITING RESULTS LTI LONG TERM INSURANCE QUARTER 2 2018 Net Premium Underwriting Surplus/ (Deficit) 1,400,000 1,112,331 1,200,000 1,000,000 800,000 673,590 600,000 400,000 305,903 N$'000 225,140 66,234 34,491 200,000 73,646 57,970 33,950 5,800 (161) - Disability Fund Funeral Health Life Sinking fund (200,000) (400,000) (600,000) (666,432) (800,000) CLASS OF INSURANCE | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg

7. KEY PERFORMANCE INDICATORS SHORT TERM INSURANCE 2013 2014 2015 2016 2017 2018 Solvency Ratio 26% 28% 29% 30% 33% 35% Cession Ratio 30% 32% 28% 28% 27% 21% Net Loss Ratio 62% 59% 55% 57% 54% 55% Expense Ratio 31% 32% 33% 37% 36% 21% Combined Ratio 93% 91% 88% 94% 90% 76% LONG TERM INSURANCE 2013 2014 2015 2016 2017 2018 Benefit payout ratio 71% 67.8% 61.% 65.2% 66.8% 79% Expenses Ratio 20.5% 14.4% 24.3% 24.1% 21.2% 23% Combined Ratio 91.5% 82.2% 85.3% 89.3% 88% 102% Cession Ratio 3.8% 1.5% 2.3% 3.2% 3% 4% | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg

8. INSPECTIONS FINDINGS Insurers Board Compositions not in accordance with the principles of good corporate governance i.e independent vs non independent Key functions outsourced to parent companies in South Africa (e.g claims above certain thresholds) Centralization of key control functions i.e. risk management and audit at local group level, usually not registered entity. Employing unregistered intermediaries (brokers and agents) & intermediaries outside of Namibia |

9. REINSURANCE 2015 2016 2017 Short-term Insurance (N$ 000) 993 145 973 591 1 005 602 Long-term Insurance (N$ 000) 233 218 294168 279 612 Standard on Reinsurance under FIM Bill Introduces limits to be placed with exempted insurers and foreign reinsurers net of NamibRe cession to limit concentration risk and stem capital outflow | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg 8/7/2024 9

10. KEY DEVELOPMENTS Proposed Bill Status Financial Institutions and Markets (FIM ) Bill Supported by Regulations and Standards Final draft available on the NAMFISA website subordinate legislation e.g. Final draft of the FIM Bill submitted to MOF by MOJ during September 2017 o To be sent to the Attorney-General for certification for submission to National Assembly o NAMFISA Bill Final draft available on the NAMFISA website Financial Services Adjudicator (FSA) Bill Final draft available on the NAMFISA website |

11. KEY DEVELOPMENTS FIM BILL Incorporates the Risk Based Supervision philosophy RBS Capital Requirement Standard to be introduced that is largely aligned to ICP that entails the need for: 1.BEL Best estimate of liabilities Free Capital 2.MoBEL Margin over the BEL Assets in excess of technical liabilities and Max(SCR,MCR) Capital Adequacy Requirement 3.CAR Capital Adequacy Requirement ; Maximum of MCR or SCR Assets MoBEL 4.MCR Minimum Capital Requirement Assets to cover technical liabilities and other liabilities Technical Liabilities BEL 5.SCR Solvency Capital Requirement Other liabilities | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg

12. KEY DEVELOPMENTS FIM BILL (cont,) Standard on Outsourcing Encourages localisation of core functions away from remote controlled operations The envisaged regulatory regime also introduces Flexibility and responsiveness to market developments allows for the issuance of subordinate legislation by the Minster responsible for Finance or the Regulatory Authority (NAMFISA) Enhanced enforcement power such as directing the removal unfit key persons, issuance of administrative penalties etc. Transparence and accountability to stakeholders Redress mechanism for consumers of financial services through the Financial Adjudicator Office | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg

13. KEY DEVELOPMENTS DOMESTIC ASSET REQUIREMENTS REGULATION 8 & 15 Regulation 8 & 15 (Investment limits) effective 31 August 2018. Compliance with the new investment limits set with the below time lines: Date Percentage 31 August 2018 not less than 40% 30 November 2018 not less than 42.5% 31 March 2019 not less than 45% | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg SHORT-TERM INSURANCE INDUSTRY MEETING 13

14. KEY DEVELOPMENTS DOMESTIC ASSET REQUIREMENTS REGULATION 8 & 15 Domestic assets consisting of shares acquired in a company incorporated outside Namibia shall not exceed the following percentages of the market value of its total assets from the following dates: Date Percentage 1 January 2018 not more than 30% 1 January 2019 not more than 25% 1 January 2020 not more than 20% 1 January 2021 not more than 15% | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg SHORT-TERM INSURANCE INDUSTRY MEETING 14

15. MAJOR ACHIEVEMENTS Capacity Building initiatives Competency exams for insurance intermediaries at advance stage Chartered Institute of Insurance (United Kingdom) exam centre status to FastTrack certification of staff Supervisory interventions Joint supervisory framework with Bank of Namibia Supervisory College to understand group dynamics Identification of SIFIs Development of Risk Model | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg

16. GROWTH POTENTIAL IN THE MARKET Increase penetration ratio i.e market of the insured Facilitate bancassurance regulatory regime Takaful insurance regulatory regime Micro Insurance regulations Facilitate Mobile insurance Products suitable for the majority Agriculture insurance i.e Index Insurance | \\namfisa-dc-02\NETLOGON\Namfisa_Logo.jpg