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Short term Industry
Tuesday, August 1, 2000
Worse results

Last year was a poor year for the short-term insurance industry. But the results recently announced by the Financial Services Board (FSB) for the first quarter of this year, show it to be one of the worst on record.

“The downward trend that started in 1998 and worsened during the first quarter last year had appeared to be turning in favour of insurers,” comments Barry Scott, chief executive of the SA Insurance Association (SAIA). “However, with the devastating floods and fires of February and March, the improvements seen during the latter half of last year, have been reversed. According to un-audited results for the three months to March 2000, released by the FSB, 18 out of 24 insurance companies classified as typical insurers reported underwriting losses, compared to 15 who reported underwriting losses for the year to December 1999. Ten of the 24 companies reported operating losses.
“The underwriting loss for the first quarter was R255m, slightly less than the underwriting loss of R288m reported for the whole of 1999. The combined underwriting and investment income for the quarter was R13m compared to R74m for the same period last year.”
Net premiums for the period amounted to R3,4 billion compared to R3,1 billion. Claims as a percentage of earned premiums were 77%, compared to claims of 72% for 1999, according to Mr Scott.
“The underwriting loss as a percentage of written premiums increased to 8% from the 2% for the 1999 year. However, this downward trend is not expected to continue.
“Insurers’ results for the first quarter this year were adversely affected by flood and fire losses, which were particularly responsible for the poor results in both the motor and fire accounts.”
Increased competition is expected to continue to impact negatively on insurers’ results.
 

Copyright © Insurance Times and Investments® Vol:13.7 1st August, 2000
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