The role played by the insurance sector in increasing GDP globally is very important and impactful. Research attests that premiums collecting by insurance companies impact economic development positively. Insurance also has positive effects to balance of payments, financial stability positively and it also increases employment in any economy. These factors therefore accelerate economic growth.
Insurance companies play an important role in the financial sector and the availability of insurance products is an essential element of sustainable economic growth.
According to a report termed the Role of insurance in the world economy and its effect to macroeconomic indicators, “Insurance increases employment in economy. Improving economic and financial stability is also one of the main advantages of insurance. For these reasons we can say that, insurance is reliable system of the economy.”
In Eswatini the Financial Services Regulatory Authority (FSRA) is an integrated regulatory and supervisory authority for all non-bank financial services providers including insurance providers. According to the FSRA Quarterly Statistical Bulletin which was released in September, the insurance industry is playing a big role in the economy from the highlights shared with the public on their website.
Giving an overview of the industry, FSRA stated that there were 76 Licensed Entities in Eswatini and 147 Licensed Individual Agents. It said from all this there were E6,5 billion Insurance Sector Assets. Additionally, a total of E452 million Insurance Sector Gross Written Premiums were recorded (GWP). The sector also had E5,2 Billion Liabilities, however 36 per cent Long-Term Insurance (LTI) Business was sourced through Brokers. On the other hand 75 per cent Short Term Insurance (STI) business was sourced through Brokers. Overall there was a 171 per cent Increase in ST Net Claims according to the bulletin.
The LTI assets as at the end of this quarter were valued at E5,3 billion. This indicates a 12 percent increase year on year growth in the value of assets and a 3 per cent quarter on quarter on the back of favourable returns from investments. In terms of compliance with the local asset holding requirements, the LTI sector continued to comply as 35 per cent of their investments were held in local instruments. About 65 per cent of the assets were invested in foreign jurisdictions with 92 percent of these funds invested in equities and other long term investment instruments. The LTI industry liabilities increased by 13 per cent year on year to E4,7 billion mainly due to increase in the insurance and investment contract liabilities.
All these figures and earlier commentary show a generally significant contribution to the GDP of Eswatini.