Growth and performance of insurance companies and their contribution to economic development of Rwanda: a case study on SORAS & SONARWA

Abstract

The stable Insurance Industry is a very crucial element as far as the development of the economy is concerned. The financial system is very complex in structure and function throughout the world and as far as Rwanda is concerned, the 2007-09 financial crisis that hit the world, Rwanda did also face the challenges. It is therefore from this context that the financial system in Rwanda had to do all the possibilities to maintain and even protect the financial stability of the economy as well as that of the Insurance companies. The main objective of the study was to identify the growth and performance of the Insurance companies and their contribution to economic development of Rwanda. They are the two Insurance Companies that were selected among the eight operating in Rwanda. The companies that were selected are SONARWA and SORAS as the leading Public and Private Insurance Companies that have generated experiences and have been operating on a large basis. From the findings, it was observed that SORAS had a well stable but fluctuating financial performance than SONARWA which registered various losses than profits in various areas, being in Premiums, Increased expenses, redundant increased assets etc. And we therefore recommended that SONARWA should make more emphasis in further Investments and generate revenues since it gained back a stable management after privatization. It was further recommended to increase the profits, Invest in Assets like land but later use them for Investments but not holding them. SORAS though profitably operating well was also recommended on various issues taking into consideration, Return on Assets, Return on Equity, Net Premiums, Liabilities, Assets and their management. The Insurance companies were recommended to invest in Financial Securities be it Long term or short securities.