The insurance industry has reported a decline in profit to Sh3.54 billion in the period ending December 2018, a 61.6 per cent drop compared to Sh9.21 billion in 2017 over low investment and poor performance in the non-life insurance business.
In the insurance report by the Association of Kenya Insurers (AKI), the industry's gross written premiums were Sh216.11 billion, representing a 3.06 per cent increase from Sh209.7 billion in 2017.
Out of this premium collected under non-life insurance business were Sh128.85 billion, a 2.22 per cent from Sh126 .05 billion over the period, accounting for 59.62 per cent of total GWP.
Life insurance business registered Sh87.26 billion, a 4.31 per cent increase from Sh83.65 billion.
Net claims incurred decreased slightly by 0.33 per cent to Sh110.34 billion.
Investments and income declined by 9.60 per cent to Sh49.98 billion, while total commission and expenses increased by .18 per cent to Sh69.35 billion.
The performance in the life insurance business was driven by growth in guarantee funds held by insurance companies to secure pension monies.
This saw pension fund grow to Sh183.3 billion, representing a 11.88 per cent increase.
The total contribution in premiums from the category increased to Sh33.26 billion.
While the life insurance saw steady growth in four years since 2014, the general business covering 14 classes including medical, fire and motor vehicle has been on a declining trend.
The report has pointed this to poor risk management especially under Work Injury Benefits Act (WIBA) policy, high premiums paid to re-insurance companies and non-compliance in declaration leading the insurance firms to operate on low premiums.
This as well as outflows due to insurance business to foreign companies.
The industry assets increased by 7.03 per cent to Sh612.15 billion.
The overall insurance penetration declined at 2.43 per cent in the year from 2.71 per cent in 2017.
“Penetration remains low to mean that growth in insurance is not able to keep with the growth in GDP,” AKI finance and administration manager Zachary Ochieng said.
