The insurance industry in Samoa has performed well to record an overall strong solvency position and improved profitability in the last financial year.

The performance of the insurance industry was highlighted in the Central Bank of Samoa (C.B.S.) annual report for the period July 2019 to June 2020.

The report stated that one of the key objectives and responsibilities of the Central Bank under its mandate is to promote and maintain financial stability.

This can be achieved by developing prudential supervision of insurance business and other non-banking financial institutions to further strengthen the stability of the financial sector and limit financial distress.

The C.B.S. has responsibilities under the Financial Institutions Act 1996 and the Insurance Act 2007 to supervise insurance companies in conjunction with the Bank’s broader responsibilities aimed at promoting the health and stability of the financial system in general.

At the end of January 2020, a total of 25 insurers and intermediaries were licensed under the Act and are listed as follows: six insurance companies (two are life and four general); three insurance brokers; and 16 insurance agents.

During the period, one general insurer was granted a provisional license for three months as a result of non-compliance with several provisions of the Insurance Act 2007. Also, one insurance broker’s license was not renewed due to its decision to exit the market.

The C.B.S. provided an overview of the domestic insurance industry performance which revealed that the consolidated total assets of the insurance sector (life and general) as of June 2020 stood at $109.0 million, up by 6.5 per cent ($6.6 million) as compared to the FY2018/2019.

“The general insurance sector continued to dominate total assets at 53.9 per cent ($58.8 million),” reads the report.

The report also stated that on the liabilities side, it declined by 0.9 per cent ($0.6 million) to $62.9 million over June 2019.

“Of total, life insurance accounted for 65.0 per cent ($40.9 million) whilst general insurers represented 35.0 percent ($22.1 million) respectively.

“The combined shareholders’ fund for the domestic insurance industry grew by 18.6 per cent ($7.2 million) to $46.1 million over June 2019. The general insurers dominated this sector at 79.7 per cent ($36.7 million).

“As of June 2020, the insurance industry achieved a combined solvency surplus of $15.6 million, revealing an increase of 16.7 per cent ($2.2 million) as compared to June 2019 balance of $13.4 million. 

"Such surplus was derived from adjusted net assets of $21.8 million less solvency margin of $6.2 million. The general insurers dominated 54.2 per cent ($8.4 million) of surplus. “

Furthermore, the report also revealed that the combined life and general insurance sectors’ gross policy and claims payments aggregated at $8.9 million reduced by 13.3 per cent ($1.4 million) over the past twelve months. 

“The life insurance sector dominated 73.2 per cent ($6.5 million) of claims paid," the report further highlighted. 

“The insurance industry registered a growth in combined profit of $5.6 million at end of June 2020 as compared to a profit of $3.1 million recorded in June 2019. The general insurance sector represents 63.8 per cent ($3.6 million) of total profit.”

The Governor of C.B.S., Maiava Atalina Ainu’u-Enari said in the report that the insurance industry also performed well, recording an overall strong solvency position and improved profitability over the year.

“During the year, the Bank continued to collaborate with the [International Monetary Fund] I.M.F.’s Pacific Financial Technical Assistance Centre (P.F.T.A.C.) towards reforming our insurance legislation and broadening the prudential standards for Samoa, in line with international principles and best practices while accounting for the size and complexity of our small domestic insurance market,” she said.

“This technical assistance project is ongoing via virtual communications, after a temporary delay due to COVID-19 travel restrictions.

“The Bank also remains committed to assist national efforts towards a sustainable environment, with its Sustainable Finance Initiative that hopes to promote the awareness and availability of sustainable and green financial products by our local financial institutions.

“Additionally, this project is in its early inception stage with initial consultations undertaken with the commercial banks, insurance companies and two of our main non-bank financial institutions as well as relevant Government Ministries during FY2019/2020.”