Advanced Search
MyIDEAS: Login to save this paper or follow this series

The insurance industry in Mauritius

Contents:

Author Info

  • Vittas, Dimitri
Registered author(s):

    Abstract

    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.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2003/05/23/000094946_03051404103340/Rendered/PDF/multi0page.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3034.

    as in new window
    Length:
    Date of creation: 30 Apr 2003
    Date of revision:
    Handle: RePEc:wbk:wbrwps:3034

    Contact details of provider:
    Postal: 1818 H Street, N.W., Washington, DC 20433
    Phone: (202) 477-1234
    Email:
    Web page: http://www.worldbank.org/
    More information through EDIRC

    Related research

    Keywords: Non Bank Financial Institutions; Payment Systems&Infrastructure; Insurance Law; Insurance&Risk Mitigation; Banks&Banking Reform; Insurance&Risk Mitigation; Non Bank Financial Institutions; Insurance Law; Banks&Banking Reform; Environmental Economics&Policies;

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Arvind Subramanian & Devesh Roy, 2001. "Who Can Explain the Mauritian Miracle," IMF Working Papers 01/116, International Monetary Fund.
    2. Vittas, Dimitri, 1995. "Tunisia's insurance sector," Policy Research Working Paper Series 1451, The World Bank.
    3. Wright, Kenneth M., 1992. "The life insurance industry in the United States : an analysis of economic and regulatory issues," Policy Research Working Paper Series 857, The World Bank.
    4. Vittas, Dimitri, 2003. "The role of occupational pension funds in Mauritius," Policy Research Working Paper Series 3033, The World Bank.
    5. Grace, Martin F. & Barth, Michael M., 1993. "The regulation and structure of nonlife insurance in the United States," Policy Research Working Paper Series 1155, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Vittas, Dimitri, 2004. "Insurance regulation in Jordan : New rules--old system," Policy Research Working Paper Series 3298, The World Bank.
    2. Vittas, Dimitri, 2003. "The role of occupational pension funds in Mauritius," Policy Research Working Paper Series 3033, The World Bank.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:3034. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.