Insurance premiums hit Sh117Bn albeit low penetration

Kenya's insurance penetration remains at a low of 2.4 per cent

In Summary

• Industry premiums, assets, investments and shareholder funds all recorded growth between the April - June 2019 period to reflect growth within the industry.

• During the period, the claims incurred by the 56 underwriters,including re-insurance firms, amounted to Sh28.84 billion.

Insurance Regulatory Authority(IRA) stand at a recent conference in Nairobi/Courtesy
Insurance Regulatory Authority(IRA) stand at a recent conference in Nairobi/Courtesy

The insurance industry has recorded an increase in the premiums underwritten between April and June 2019 even as Kenya lags behind on insurance penetration compared to her peers.

The sector which has equally been destabilised since the capping of interest rates, that has constrained lending to insurable investment projects and assets, defied the odds to hit Sh17.28 billion on underwritten premiums.

This was a 4.4 per cent increase compared to Sh112.39 billion recorded over the same period in 2018, the Insurance Regulatory Authority(IRA) data shows.

This development is largely attributed to the 2.9 per cent growth recorded by the general

business segment and 6.9 per cent by the long term insurance business segment,” IRA notes in its quarter two report.

The increase in general business was mainly contributed by medical and motor private insurance classes of business which accounted for 66.8 per cent of the gross premium income.

During the period, the claims incurred by the 56 underwriters(including re-insurance firms) amounted to Sh28.84 billion.

This was a decrease of 1.3 per cent from the Sh29.21 billion reported at the same time in 2018.

Medical insurance, motor private and motor commercial were the largest contributors to the claims incurred with each contributing 33.6 per cent,27.9 per cent and 25.1 per cent respectively.

According to the IRA , investors’ equity funds grew by 4.0 per cent to stand at Sh157.83 billion as at the end of June 2019 from Sh151.78 billion reported in the same period of 2018.

The shareholders’ fund comprised of retained earnings at 39.3 per cent , share capital at 29.4 per cent , statutory reserves at 14.7 per cent , revaluation reserves at 2.6 per cent and share premium at 5.4 per cent.

During the period , government securities (treasury bills and bonds) maintained their attractiveness to long term insurers comprising 67.3 per cent(Sh257.56 billion) of the total long term insurers’ investments.

“The total value of the industry assets during the period grew by 7.6 per cent to Sh672.13 billion from Sh.624.59 billion held as at the end of June 2018.

“82.8 per cent (Sh556.32 billion) of these assets were held in income generating investments,” IRA noted.

During the period under review, the premium reported by the long-term insurers amounted to Sh44.25 billion, a growth of 6.9 per cent compared to Sh41.39 billion reported in Q2 2018.

In the three months, Jubilee insurance grew its market share by gross premiums from 9.3 per cent to top the list with a 9.8 per cent share.

It is followed closely by APA insurance with a gross premiums market share of 8.3 per cent , having increased from 6.3 per cent. Britam comes in third with a 7.4 per cent share after increasing from seven per cent.

CIC insurance and UAP lost their market share from 7.6 per cent to 7.1 per cent and 7.7 per cent to 6.4 per cent respectively, though they remain among the top five largest holders of premiums.

Investments by the insurers and reinsurers grew by 9.1 per cent to Sh.556.32 billion from Sh509.69 billion held as at the end of June 2018.

Asset classes with the highest proportions of above five per cent were government securities (60 per cent),investment property (15 per cent, term deposits (9.3 per cent) and listed equities (seven per cent).

Insurance firms have however been reporting losses in recent times, blamed on among others, capping of iterest rates.

Kenya's insurance penetration remains at a low of 2.43 per cent.