Press Release: NBFIRA 1/9/6 – I, 8th May, 2020
NBFIRA Publishes the 2019/20 Research Bulletin: The Botswana Insurance Industry
- Insurance Industry Performance, Trends and Forecasts
- Capital Adequacy Measurement- the new Insurance Industry Act, 2015.
- Progress on Financial Inclusion and Literacy within the Insurance Industry
Botswana: The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) released its 2019/2020 Research Bulletin which is produced annually.
This year’s Bulletin contains insightful articles that explore a range of topics within the Insurance Industry, ranging from the dynamics and performance of the domestic insurance market to key trends in insurance the industry.
“As the regulator of the insurance industry, the Authority is keen to keep its various stakeholders abreast of key developments of interest in both our local insurance industry and global trends. Domestic issues explored include the introduction of the new Insurance Industry Act, 2015 particularly the Capital Adequacy requirements. Also of interest are developments in the financial inclusion space, particularly in relation to product development and strengthening distribution channels. The Bulletin also explores associated regulatory and policy interventions and the overall financial stability of the insurance market.” said Sriram Gade, Acting Chief Executive Officer of NBFIRA.
The domestic insurance industry is governed by various financial services laws including the Insurance Industry Act, 2015 and its supporting regulations which commenced in 2019. The new Act which is the legal framework for the Insurance industry is primarily designed to bring greater synergy between the legal framework with the Authority’s Risk-Based Supervisory regime, enhance the protection of policyholders and foster greater transparency and accountability of industry players. The Regulations for the new Act are an application tool to the provisions already in the Act.
Other financial services laws such as, inter alia, the International Insurance Act, 2005, governs international insurance services such as reinsurance, captive insurance and related activities, which can provide services to foreign markets and in currencies other than the Botswana Pula (BWP); the Financial Intelligence Act (FIA), the Income Tax Act and CIPA to name a few.
At the end of March 31, 2019 players in the domestic insurance industry consisted of 23 insurance companies operating in Botswana with 15 being general insurers and reinsurers, and eight life insurers. Medical aid funds were five while intermediaries were 208(58 brokers and 150 Corporate Agents.
The Life insurance sector has over the past five years constituted the largest market share of Gross Written Premiums (GWP). In 2014, the market share in terms of GWP for the life sector accounted for 70% of the total insurance industry and had registered an increase to 75% in 2018. Fitch Solutions has forecast the share to grow to 81% in 2023. Furthermore, the life insurance sector registered the density and penetration ratios of 0.13% and 1.94% in 2014 rising to 0.18% and 2.15% in 2018, respectively. The sector is expected to maintain the lead during the 2019-2023 forecast period.
The general insurance sector on the other hand was considerably small registering a market share of 25% of GWP in 2018 and is expected to decrease to 19% by end of the forecast period in 2023. Meanwhile the insurance penetration ratio for the general insurance business stood at 0.72% in 2018.
In light of Botswana’s relatively small population size, approximately 30% of the population have a form of insurance cover. This presents an opportunity for further growth of the industry by reaching the untapped 70% of the market. The opportunity for insurance expansion is even greater in the General, personal accident and health insurance businesses, where the penetration ratio is below one percent.
The 2019/20 Research Bulletin is available on the www.nbfira.org.bw.
Notes to Editor
About the Non-Bank Financial Institutions Regulatory Authority (NBFIRA)
Promulgated by an Act of Parliament in 2006, the Authority began its operations in 2008 and since then has achieved significant regulatory and supervisory milestones that have enabled the NBFI sector to grow and operate in line with international standards and best practices. The Authority oversees the NBFI sector, which in 2018 had assets worth approximately P121 billion, accounting for 55% of total assets in the local financial system. In that year, the sector comprised of just under 800 regulated entities and had a gross income of P17 billion. The Authority is governed by the NBFIRA Act, 2016 which repealed the previous NBFIRA Act, 2006.
For more information, please contact:
Boa M. Chombah
Head, Communications & International Affairs
Tel: +267 310 2595 / 368 6100;
Email: bchombah@nbfira.org.bw
