Looking at the growth numbers of the country's insurance industry in isolation, it seems the sector has not had a long history. Double-digit growth rates in insurers core businesses draw a resemblance to any nascent, up-and-coming industry, online retail for instance. In reality, the big names in the industry have existed for many decades.
In the third quarter of CY15, private-sector life insurance firms reported collective net premiums of Rs15.5 billion which is a staggering 55 percent growth year-on-year (YoY) compared to CAGR of 31 percent since 2010. Despite a steep decline in investment income from a year ago, the sector managed a 56 percent increase in after-tax profits to Rs645 million.
Non-life insurance is the slower of the two segments in terms of growth however it also showed great promise. Net premiums jumped 24 percent YoY in the three-month period, as opposed to 12 percent in 1HCY15. Underwriting income - a gauge for core business performance - rallied 82 percent in the September quarter compared to 30 percent in the first two quarters. Decline in income from investments, however, led to only a 13 percent profit growth - lower compared to recent trends.
Strong, persistent growth in insurance businesses is also reflected by the size of their balance sheets, especially for life insurers. Having less than Rs40 billion in assets in 2010, life insurers now have assets worth more than Rs150 billion. These firms operate some of the largest funds in the country.
Product innovation, and more importantly, development of new distribution channels has escalated the growth trajectory for insurers.
While the industry does suffer from poor penetration rates, recent numbers indicate improvement. With mainstream insurers now pushing Shariah-compliant products as well, the industry does not look like it will be slowing down at the moment.
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