The number of claims from motor vehicular accidents took a dip last year, thanks to the COVID-19 pandemic. This, as the level of gross premiums for the insurance industry in Barbados fell by some 1.7 per cent last year to reach $488 million.
According to the recently released 2020 Financial Stability Report, the decline in gross premiums for the sector came as lines of business such as motor and property and “other” recorded marginal declines in the number of policies in force.
“Subsequent to the 2018 domestic debt restructuring programme, profitability of the sector showed signs of improvement as the return on assets stood at 3.8 per cent, 2.1 percentage points higher than in 2019. The net income position improved as the industry recorded lower underwriting expenses,” said the report.
“This fall in expenses stemmed from lower-than usual claims from lines of business such as motor, following the first COVID-19 lockdown. As at the end of December 2020, preliminary estimates indicate an approximate 6 per cent falloff in the level of claims for the motor vehicle line of business,” it said.
At the end of December 2020, total assets in the general insurance industry were estimated to be around $987.8 million, a 5.6 per cent decline, when compared to the previous year.
“The decline in assets was mainly reflected in cash and deposit holdings, which fell by $23.1 million. Similarly, total liabilities for the group also fell by 5.8 per cent to reach $813.9 million. This is the result of reductions in provisions set aside for claims and decreases in other liabilities such as treaty accounts and premium taxes,” said the report.
Property insurance continued to be the largest line of business, accounting for 35 per cent, followed by motor, which accounted for 33 per cent, consistent with the percentage recorded over the last two years.
In relation to life insurance, the combined assets at the end of 2020 for the six companies writing this line of business were $2.75 billion, representing an increase of 5.7 per cent over the comparable period one year earlier.
The report, which is done by the Central Bank in collaboration with the Financial Services Commission and the Barbados Deposit Insurance Corporation, said the increase in assets for the life insurance industry was driven largely by the growth in related party investments which were estimated to be approximately $1.23 billion, 8 per cent higher than recorded at the end of December 2019.
It said: “Government and company bonds, the second largest component of investments, increased by approximately 8 per cent. Similarly, total liabilities, which were driven by increases in life insurance and annuity provisions, rose by 2.3 per cent to reach approximately $1.4 billion”.
At the end of 2020, capital as a percentage of assets was an estimated 48.2 per cent, 1.7 percentage points higher than at the end of 2019. “All entities exceeded the required solvency margin and the assets base exceeded liabilities by approximately 93 per cent,” it said.
The number of gross life insurance premiums written last year fell by an estimated 3.7 per cent, as all lines of business with the exception of industrial life and group life, reported lower premiums than the prior year.
“The ordinary life line of business continued to account for over half of the premiums generated by the life sector in 2020. The 53 per cent recorded reflected an increase of 3 percentage points when compared to 2019,”
said the report.
“Profitability for the sector dipped slightly in 2020, falling by 0.5 percentage points to reach 4.3 per cent. The sector experienced a fall in total expenses of $60.4 million, but, this was overshadowed by the $65.8 million decline in revenue recorded during the period as a result of lower returns from related party investments,” said the report. (MM)
