The macro-economic picture showed improvement in 2021, as the economy, which had contracted sharply by 7.7% in 2020, stabilised in 2021 with a marginal contraction of 1.0%. Some of this improvement was due to COVID-19 support measures, the roll out of the vaccine programme in the middle of the year, and the reopening of commercial activity in the last quarter.
The Pandemic also had an impact on both oil and gas production, and while oil production rebounded in 2021, to 2019 levels, gas production was dampened by plant turnarounds, which offset much of the gains in oil and gas prices. Inflation remained mostly subdued, but a surge in international food and energy prices pushed it up by the end of 2021. Central government debt also increased.
- Texas Natural Gas Industrial Price ($ per 000cf): $2.32* at the start of 2020 to $5.69*, by the end of 2021.
- Inflation: 2.0%- 3.9% (2020 1%)
- Central government debt: 65.9% of GDP (2020: 45.4% of GDP)
These results demonstrate that volatility continues to be the biggest challenge facing companies and therefore Resilience becomes a top priority.
On the positive side, the Pandemic show-cased the insurers’ readiness and flexibility of operating models in distribution, service, and customer engagement.
For this reason, this year’s point of view (below) focuses on three of the most powerful forces shaping resilience: the role of purpose, the role of co-opetition / advocacy, and the role of strong technology and data capabilities, and we close with five thought provoking questions for insurers.
Adherence with the principle of IFRS 17 is also the new compliance matter taking up the attention of insurers, the results of which will become apparent in 2022. This is a costly implementation for our region as the skill set and technology support for implementation is limited and the benefits especially as it relates to the users of financial statements, is unlikely given the sophistication of our market.
2021 was also the first time, that insurers had to comply with the new Insurance Act, both in terms of solvency requirements and reporting. This latter change has impacted the way that some of the key performance indicators in this year’s analysis are presented.