The Insurance Industry in Mauritius
The insurance industry is relatively well developed. It makes extensive use of reinsurance facilities and is free from the pervasive premium, product, investment, and reinsurance controls that have bedeviled the insurance markets of so many develop...
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| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2003/04/2329627/insurance-industry-mauritius http://hdl.handle.net/10986/18272 |
| Summary: | The insurance industry is relatively
well developed. It makes extensive use of reinsurance
facilities and is free from the pervasive premium, product,
investment, and reinsurance controls that have bedeviled the
insurance markets of so many developing countries around the
world. Total premiums amounted in 2001 to 4.1 percent of
GDP, while insurance company assets were equivalent to 18
percent of GDP. Life insurance, which has been favored by
generous tax incentives and has also benefited from the
growth of pension business and housing finance, represents
61 percent of total premiums. Nonlife business is also well
organized. Large industrial and commercial risks are
reinsured with top international companies, while motor
insurance, which is the largest class of business with 45
percent of total nonlife premiums, does not suffer from high
loss ratios or unduly long delays in settlement. Investment
limits are generally sound and, with some small but
important exceptions, effectively nonbinding. There is no
minimum requirement for investment in government securities.
Investment in overseas assets is limited to 25 percent of
total assets, except for foreign life companies and general
insurance business which are not allowed to invest in
overseas assets. The insurance sector is highly
concentrated. The three largest groups have 76 percent of
total assets. Despite the high level of concentration, the
insurance industry appears to be competitive, operating with
high efficiency and re Despite the high level of
concentration, the insurance industry appears to be
competitive, operating with high efficiency and reasonable
profitability. Large and medium-size companies have strong
reserves, appropriate reinsurance arrangements, and good
profitability. However, several of the smaller companies
have weak financial ratios and suffer from long delays in
settling claims. Insurance regulation and supervision is
entrusted to the Financial Services Commission (FSC). The
current regulatory framework has many strong elements,
including reliance on solvency monitoring, prudent asset
diversification, international accounting standards, and
actuarial methods. But there are some important gaps in
corporate governance, internal controls, and risk
management. In addition, solvency ratios are below
international standards and do not include modern risk-based
capital requirements. These gaps are already being addressed
in two new draft insurance bills which contain many highly
modern provisions. Implementing regulations on solvency and
actuarial standards need to be developed. Insurance
supervision has been invigorated since the creation of the
FSC, but further strengthening is required. It needs to
emphasize risk management and internal controls, to develop
an early warning system, and to establish clear procedures
for early and effective intervention. The FSC should require
actuaries to report on the reinvestment risk faced by
insurance companies and their exposure to a large and
persistent fall in interest rates. |
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