The insurance industry in Mauritius
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.