Do you own or want to buy a motor vehicle in Kenya? You will have to dig deeper into your pockets to get covered, as underwriters adjust upwards-payable premium rates.
Some firms have increased rates by up to 50 per cent, communications to clients, seen by the Star show, with comprehensive insurance being the main focus affecting both new and renewal business.
A message seen by the Star shows a customer paying Sh47,714 will be required to pay Sh72,324 next year , a 51.6 per cent increase.
The premiums vary based on the value of the car with premium adjustments varying from one company to another.
The vehicle sum insured, payable in the case of an accident, has also been affected by the changes which cover both private, commercial, institutional vehicles, and tour vans.
"We note there is a notable continued deterioration in the performance of motor class business and thus to ensure that motor book is sustainable, we hereby issue revised rates applicable effective January 1 2022," Metropolitan Cannon Insurance says in a communique, as it outlines new rates.
While insurance companies have pegged the increase on a challenging business environment and losses, the majority of them remain profitable despite an increase in claims in the wake of the pandemic.
Some of the companies that recorded an increase in net profit this year include Jubilee, CIC Insurance, Britam and UAP Group.
Jubilee Holdings announced a profit of Sh4.5 billion in its half-year net earnings compared to Sh1.8 billion posted in a similar period last year.
The group said that the improvement in the performance was greatly influenced by gains from the sale of a majority stake in its former subsidiary, Jubilee General Insurance Limited to Germany's Allianz.
CIC Insurance reported a Sh260 million net profit for the half-year period from a net loss of Sh335.5 million reported in the same period last year.
The firm's return to profitability was helped by improved performance in its underwriting business and higher investment income.
Claims however increased seven per cent to Sh5.8 billion, partly due to a rise in benefit payouts in the life insurance business as a result of the pandemic.
Britam Holdings on the other hand posted a Sh376.3 million net profit in the first half of 2021, marking a recovery from Sh1.63 billion net loss posted in a similar period last year.
UAP Old Mutual Group recovered from a loss of Sh305 million in its half year 2020 to post a net profit of Sh252 million in the first six months of 2021.
Sanlam Kenya however posted a dip in earnings reporting a Sh291.8 million loss in the first half of the year, up from a Sh99.1 million loss posted in the same period last year.
The move to adjust premiums has been faulted by motorists and car dealers saying there was no public participation which the Insurance Regulatory Authority (IRA) ought to have led before allowing underwriters to make adjustments.
“An increase without public participation is arbitral, illegal, spiteful and disrespectful. Claim that claims have increased is wrong. Claims increase is commensurate to vehicle increase which means an increase in premiums at the same time,” the Motorist Association of Kenya wrote on tweeter.
The Car Importers Association of Kenya chairman Peter Otieno said: “It will make comprehensive insurance unaffordable to many pushing a huge number to third party insurance.”
The changes come amid an increase in the demand for insurance with premiums increasing by 19 percent in the second quarter of 2021 to hit Sh144.02 billion, IRA data shows.
This is compared to Sh121.04 billion same period last year.
General insurance business underwriting however reduced from a marginal profit of Sh62.45 million in the quarter to a loss of Sh1.46 billion.
According to IRA, the general insurance business remained the largest contributor to industry insurance premium contributing 59.3 per cent of the total premium.
Motor insurance and medical insurance classes of business account for 62.3 per cent of the gross premium income under the general insurance business.
Over the pandemic period, there has been an increase in the number of claims according to the industry regulator
Insurers received over 2.1 million claims in the second quarter of 2021, a 19 per cent increase compared to the first quarter of the year (1.7 million).
The increase in claims is illustrated by a 64 per cent dip in profit at Kenya Reinsurance Corporation in its half year results, meaning the firm shouldered more heat from the insurance firms.
The high industry premium volume classes of general insurance business contributed the largest proportions of incurred claims; medical (38.7%), motor private (29.8%) and motor commercial (22.8%).
Motor classes of insurance business comprised of 52.7 per cent of total claims incurred compared to their contribution of 27.8 per cent of the total premium under general insurance business.
