Patty Karuaihe-Martin, Managing Director, NamibRe
The year 2020 has been unprecedent for Namibia, as it has been for the entire world. We have all been faced with unique challenges as a result of the novel coronavirus and the resultant impact on our social and economic ecosystems.
The insurance industry as a mitigator of risk and a stout pillar in supporting financial stability is expressively impacted by this phenomenon. As the economy recovers and responds to the pandemic, insurers and reinsurers are expected to face copious challenge. There are many lessons to be learned from the pandemic which include the importance of focused investment in social and environmental sustainability.
As global Corporate citizens, we have a responsibility
to better preserve the environment we live in, and the insurance industry can be a beacon of light in this regard. To this end, NamibRe is proud to be a signatory to the UNEP Principles of Sustainable Insurance (PSI) and is determined to promote the adoptions of these principles in the local and regional markets.
Namibia remains an immensely attractive investment destination within the Southern African region. The country has recorded a score of 35.4 and 41.4 out of 100 in Fitch Solutions’ Short-term and Long-term Economic Risk Index, respectively. Namibia’s short and long-term scores have resulted in the country being ranked 5th and 7th respectively amongst its Sub-Saharan Africa peers.
Although real GDP is expected to contract in 2020 due to the impact of Covid-19, it is expected to return to positive growth of 2.1% in 2021 (Bank of Namibia). Namibia is expected to remain one of the most politically stable countries in Sub-Saharan Africa over the next decade, as it has been historically. Fitch further expects the broad policy stability and continuity following the results of
the 2019 elections, which ensures a business and foreign investment friendly policy agenda.
Namibia’s insurance market penetration remains fairly good at 9.3%, second in the region to South Africa whose penetration stands at 12.6% (per GCR insurance sector risk scores – May 2020), but better than the global average of 6.3%. The industry is well capitalised with total assets amounting to U$ 4.5 billion. The long-term insurance industry reported U$ 4 billion whilst the short-term insurance industry accounted for the remaining U$ 500 million. Excess assets of the industry amount to 17% of total assets whilst capital adequacy and solvency buffers remain predominantly above prudential requirements. These results are indicative of a well-capitalised industry able to withstand unforeseen market events which may arise due to Covid-19.
As the only registered reinsurer in Namibia, NamibRe continues to record a sustained growth financial performance. Notwithstanding the myriad of challenges faced by many organisations during 2020 as a result of the pandemic, NamibRe reported notable financial results which seen the Corporation’s Gross Written Premium (GWP) increase by 163% from U$ 19 million to U$ 50 million during the year ended 31 March 2020. The Corporation was able to increase its retention rate by 12% during the same period. Another notable financial highlight is the 44% increase in total assets of the Corporation from U$ 30 million reported in prior year to U$ 43.7 million.
The Corporation’s view on the future perspective is that digitisation and enhancements in technology will become more prevalent and this has been expedited by Covid-19. We therefore expect to see an acceleration in the adoption and enhancement in relation to the way insurers and reinsurers do business.
Another key focus, specifically in the African context, is how the insurance industry can contribute to achievement of the UN Sustainable Development Goals (SDGs) of No Poverty and Zero Hunger. Countries such as Kenya and Zambia provide great case studies for crop insurance which will improve food security and contribute to the achievement of the aforementioned goals. NamibRe, in conjunction with various key partners, is proud to be leading the efforts locally.
While the future remains unknown and the global economy grapples with negative growths due to COVID-19, there are ample opportunities which are emerging in terms of transforming how the industry conducts business.
For Namibia, the Government’s response to contain the spread of the COVID- 19 pandemic allowed the country to gradually resume with economic activities as well as contain the number of infections.
As a result, the tourism sector which has been negatively impacted by the pandemic is ready to welcome travellers back to the beautiful landscapes of Namibia.