Labuan insurance industry posts growth despite volatile environment

Island’s insurers were able to shift focus to insurance lines less dependent on the price of oil, says central bank governor

Labuan insurance industry posts growth despite volatile environment

Insurance News

By Gabriel Olano

The re/insurance sector of Labuan, a Malaysian special economic zone concentrating on finance, has posted positive growth for 2016, registering a 3.3% increase in gross written premiums reaching US$1.4 billion.

According to Bank Negara Malaysia (BNM) Governor Datuk Muhammad Ibrahim, the positive growth happened despite an environment of volatile oil prices, which affects insurance classes such as engineering and marine. According to Ibrahim, insurers and reinsurers were able to shift focus from these lines into other specialised areas.

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He added that the Labuan International Business and Financial Centre (IBFC) posted increased premium retention, which means a rise in the internal capacity of the island’s insurance industry to underwrite more business, especially from non-residents, which brought in 57.9% of total premiums.

“2016 also recorded the highest underwriting margin since 2012 due to higher earned premiums written and lower claims during the year,” Ibrahim told state-owned media Bernama.

“Overall, the sector remained strong and sound, registering profit before tax that grew significantly by 52.4% to US$387.0 million and a margin of solvency, of more than six times above the minimum regulatory requirement,” he added.

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