A subdued insurance performance is likely in store for the industry this year, with the downward revision to forecasted economic growth following Tropical Cyclone Winston.
According to the Reserve Bank of Fiji’s (RBF) Annual Report 2015, life insurers are expected to continue with increasing momentum and stable returns on investments, though at a slower pace. This in line with an anticipated downturn in economic activity.
“General insurers’ loss ratios are expected to increase in 2016, particularly for the fire and motor vehicle classes, as a result of the losses arising from TC Winston.”
It added, however, that reinsurance recoveries would, to some extent, cushion the impact of the catastrophic event on the solvency position of the industry.
“As such, insurers will need to develop sound capital management plans and ensure that they remain well
capitalized.
“Additionally, the domestic market is likely to experience hardening conditions as premium prices increase, reflecting the adjustments for anticipated increase in reinsurance costs and TC Winston claim payments.”
The RBF said insurers would thus have to continue prioritizing quality underwriting and sound risk management practices to maintain favourable earnings and solvency positions in 2016.