NicozDiamond managing director, Grace Muradzikwa.
ZIMBABWE’S largest short-term insurer, NicozDiamond has posted an operating profit of US$1,9 million for the half year to June 30, 2014, a 60 percent increase from US$1,2 million achieved during the same period last year, despite demand for insurance declining due to cash shortages in the economy.
Economic activity has been very subdued and demand for insurance has slackened, mirroring the liquidity challenges in the economy.
Gross premiums declined by one percent to US$15,75 million, from US$15,99 million the previous comparable period. “Resultantly, a significant portion of the premium was earned in June compared to last year. Premium collection remains a challenge in the market,” managing director, Grace Muradzikwa, said.
Nicoz Diamond has managed to keep its loss ratio below 50 percent due to the conservative approach adopted by the company last year to avoid losses incurred when paying out. “A lot of measures were put in place to minimise the cost of claims and to ensure that only authentic claims are paid out,” Muradzikwa said.
Insurance loss ratio is the loss to the insurance company for claims that were paid out, divided by the premiums paid by those insured. A high loss ratio suggests that an insurance company has too many clients making claims. It is in an insurance company’s best interest to limit the amount of claims paid. They would assess this number to determine whether they need to make adjustments, such as more stringent requirements for applicants, or raising insurance rates.
“It is hoped that these good ratios will be maintained to year end. Whilst prudent underwriting and risk management play a critical role in managing the performance of the book, the magnitude and severity of claims in any given period is to an extent luck and pure fortune,” Muradzikwa said.