Page 21 - IB March 2025

Insurance

INSURANCE GROWS BUT

FACES CHALLENGES

National Fire Authority personnel at training. Photo: NFA

By Ema Ganivatu Biman Prasad referenced challenges relating to health
insurance, particularly the move away from bulk billing,
The general insurance sector in Fiji has maintained a and subsequent difficulties and time it can take for some
positive performance in 2023, growing 8%. people to receive reimbursement for payments they make for
Despite facing challenges such as rising claims costs and medical procedures.
increasing competition, the sector showed resilience and is He flagged the review of the Insurance Act to ensure
poised for continued progress, according to the Reserve Bank ‘flexibility, efficiency and effectiveness’ in the sector.
of Fiji’s (RBF) 2023 Insurance Annual Report, which was tabled Despite these concerns, the RBF says the sector remains
in parliament recently. a critical part of Fiji’s economy. The insurance penetration
The report stated that total combined assets of the life and rate, a measure of the industry’s reach, stood at 3.5% of
general insurance sectors increased by 7.9% to FJ$2.7 billion, GDP in 2023, consistent with the past two decades. While
representing 9.2% of the gross assets of the Fijian financial this indicates stable demand, it also shows room for growth,
system. especially in underserved regions.
It continued: “The domestic gross premium pool continued
to grow… to FJ$440.7 million, on the back of increased Predictions for 2025: A year of transformation and
underwriting activity. The combined profitability of the Fijian opportunities
insurance industry however, declined to FJ$33 million over Looking ahead, the sector is expected to expand by 5-7%
the year, attributed to the increase in total outgoings and net in 2025, with further diversification of products to cater
claims paid during the year.” to evolving consumer needs. There is a strong emphasis on
The sector recorded a 10.3% increase in gross premium enhancing digital transformation to streamline processes and
income, reaching FJ$243.9 million in 2023. This growth improve customer engagement.
follows a period of recovery after the COVID-19 pandemic, Furthermore, the report predicts that the penetration rate
which significantly impacted the market in 2020 and 2021. will continue to show a gradual increase especially as more
The absence of any large-scale natural disasters in the period rural and underserved markets are tapped. The push towards
and increasing household incomes also helped. micro-insurance products aimed at low-income communities is
The fire, medical, and motor vehicle insurance classes expected to make insurance more accessible and affordable,
remained the dominant contributors, accounting for 77.5% of potentially raising the penetration rate to 3.8% of GDP by
the sector’s total gross premiums. The fire class recorded the 2025.
highest growth, rising by 13.5% to FJ$77.2 million. However, the Reserve Bank also cautions that insurers will
The insurance industry’s assets include Government need to adapt to changing risk environments, particularly as
securities, bank deposits, and investments in shares. climate-related risks increase.
Liabilities were made up of the balance of revenue account Additionally, competition in the sector is expected to
for life insurers, and underwriting provisions for the general intensify in 2025, particularly with the potential entry of
insurance sector. new players and alternative risk financing models. This will
The sector did face some challenges in the reporting period. challenge existing insurers to remain competitive by offering
Claims payouts saw a significant jump of 26.4%, reaching more value-added services, better customer experiences, and
FJ$132.4 million in 2023. Much of this increase was driven by innovative pricing structures.
higher claims in the medical, fire, and motor vehicle classes. As the sector adapts to these challenges, affordability
This has raised concerns about the growing costs of claims, remains a significant concern.
which continue to put pressure on insurers’ profitability. The reports notes that while growth is expected, insurers
Increasing reinsurance costs and challenges with will need to balance rising claims costs with affordable
affordability could also hamper the Fijian insurance industry’s premiums for consumers.
future earnings performance, the Reserve Bank observes. Implementing more risk-based pricing and better
Other emerging risks to this outlook continue to be climate- understanding among consumers about the importance of
related disasters and cyber threats. adequate insurance coverage will be key strategies in ensuring
Speaking to the report in parliament, Deputy Prime Minister sustainable growth.

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