Insurance
From The Report: Papua New Guinea 2015
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Due to several factors, Papua New Guinea is one of the least insured countries in the world. However, the low take-up of insurance is not, in this case, the result of a lack of experience. PNG has had an insurance sector for more than a century and it was once administered by Australia, an historically insurance-conscious society. The problem is more the result of geography, topography and income. Despite its many challenges, the PNG insurance market is healthy and competitive. PNG has no limits on foreign investment in the sector, and foreign insurers are active as investors and as indirect participants through reinsurance and brokerage. The sector is open, profitable and has great potential. Given the low penetration rate and growing economy, more policies will likely be sold and more risk can be covered. Still, the sector must develop, especially in terms of best practices and pricing.

This chapter contains an interview with Philip Tolley, Managing Director, Capital Insurance.

Articles from this Chapter

Overview

Working to extend insurance to PNG’s general populace
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Due to several factors, Papua New Guinea is one of the least insured countries in the world. It is estimated that premiums comprise just 1.4% of GDP, according to the Pacific Financial Inclusion Programme (PFIP). Other regional competitors and peers have significantly higher rates. The PFIP puts Fiji, for example, at 3.6%. Swiss Re, which does not publish data on PNG, places Indonesia’s insurance penetration rate at 2.1%, Malaysia’s at 4.0%, Thailand’s at 5.5% and Australia’s at 5.2%. PNG…

Analysis

International insurance firms face challenges covering PNG
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Facing extreme risks from natural disasters, as a result of the country’s location on the geological “Ring of Fire”, insurance is a much-needed service in Papua New Guinea. PNG has frequent earthquakes and is home to a number of active volcanoes. The city of Rabaul was destroyed by volcanic eruptions in 1934 and again in 1994. In 2014, one of the volcanoes in the area (Tavurvur) erupted again. The 1998 earthquake and subsequent tsunami near Aitape killed more than 2000 people, and a swarm of…

Analysis

PNG’s niche markets require cultural insight to insure
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A projected rise in home ownership and increasing demand for private health coverage are among the forces expected to drive growth in Papua New Guinea’s insurance sector. However, competitive pressures and global risks may also hamper the industry throughout 2015-16. Though the number of registered insurers is small, the market relatively limited and take-up rates for most forms of non-compulsory insurance low, competition is thriving and the sector is profitable, with low loss ratios despite a…

Interview

Philip Tolley, Managing Director, Capital Insurance: Interview
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Interview: Philip Tolley How would you assess the likely risks for the insurance industry in Papua New Guinea at present? PHILIP TOLLEY: The insurance industry in PNG has encountered several challenges in recent years, most notably the major fires in Lae and Mount Hagen, which were caused largely by fluctuations in the power supply and electric faults, and which caused significant losses for the industry. While fire brigades in PNG may arrive quickly at the scene of an accident, they often lack…