UNDERWRITING

Demand for insurance rises, premiums hit Sh144bn

General insurance business remained the largest contributor according to IRA.

In Summary

•The value of premiums are up compared to Sh121.04 billion same period last year, latest data by the Insurance Regulatory Authority indicate.

•General insurance business underwriting results however reduced significantly from a marginal profit of Sh62.45 million in the quarter, to a loss of Sh1.46 billion.

Insurance Regulatory Authority CEO Godfrey Kiptum, PCF Managing Trustee William Masita and National Treasury CAS Nelson Gaichuhie pose with a Concord insurance claimant John Nthei in Nairobi, on August 18, 2021/
Insurance Regulatory Authority CEO Godfrey Kiptum, PCF Managing Trustee William Masita and National Treasury CAS Nelson Gaichuhie pose with a Concord insurance claimant John Nthei in Nairobi, on August 18, 2021/
Image: CHARLENE MALWA

More businesses and individuals sought insurance in the second quarter of this year compared to last year, industry data shows.

This shows recovery of the economy from the Covid-19 pandemic which led to loss of income after hundreds of businesses in Kenya closed or scaled down operations.

Some of the sectors hard-hit include tourism and hospitality, education, international trade and SMEs in different sub-sectors of the economy.

Households have also been affected with job losses and deaths, which has seen an increase in the uptake of long-term policies including life assurance.

Insurance premiums went up by 19 percent in the second quarter of 2021 to hit Sh144.02 billion compared to Sh121.04 billion same period last year, Insurance Regulatory Authority(IRA) data shows.

This came even as general insurance business underwriting results reduced significantly from a marginal profit of Sh62.45 million in the quarter, to a loss of Sh1.46 billion.

It is attributed to high increase in loss ratios due to relaxation of restrictions that had been imposed on travel due to Covid-19 pandemic.

According to IRA, general insurance business remained the largest contributor to industry insurance premium, contributing 59.3 per cent of the total premiums at Sh85.36 billion.

This is non-life insurance policies, including automobile and homeowners policies, which provide payments depending on the loss from a particular financial event.

Long-term insurance premiums stood at Sh58.66 billion in the period under review.

Claims incurred in the general insurance business amounted to Sh32.38 billion during the period , a 15 per cent increase from Sh28.08 billion reported in the second quarter of the previous year.

“The high premium volume classes of general insurance business contributed the largest proportions of incurred claims; medical (38.7 per cent), motor private (29.8 per cent) and motor commercial (22.8 per cent),” IRA noted in a statement yesterday.

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.

The claims paid increased by 16.9 per cent to Sh30.60 billion compared to Sh26.17 billion paid in quarter two 2020.

Medical, motor private and motor commercial had the highest amounts of paid claims accounting for 39.3 per cent, 26.9 per cent and 21.5 per cent, respectively, of total industry paid claims under general insurance business.

There are 56 insurance companies under the regulator's watch with the market served by five re-insurance companies, where penetration is still at a low of 2.43 per cent.

The industry has about 10,457 insurance agents, 229 insurance and reinsurance brokers and 29 bancassurance agents.

UAP Insurance maintained the market lead under the general insurance market with 8.6 per cent market share followed by CIC General Insurance and GA Insurance at eight per cent and 7.7 per cent, respectively.

On the other hand, companies in the long-term business made Sh54.57 billion a 22.9 per cent increase from Sh44.4 billion reported by the end of Q2, 2020.

Britam Life Assurance maintained its lead, with 21.3 per cent market share followed by ICEA LION Life Assurance at 16.2 per cent and Jubilee insurance company with 11.5 per cent market share.

The total net premium income (NPI) reported by long term reinsurance companies declined marginally by 0.9 per cent to Sh1.5 billion, compared to Sh1.52 billion reported in Q2 2020.

General reinsurers reported an increase in the net premium income of 13.4 per cent from Sh10.73 billion reported by the end of Q2 2020 to Sh12.17 billion in Q2 2021.

The insurance industry asset base grew by 11 per cent to Sh819.65 billion as at the end of Q2, 2021 from Sh738.72 billion held as at end of Q2 2020.

A significant portion of total assets Sh698.05 billion (85.2%) were held in income generating investments.

Investments in income generating assets grew by 12.9 per cent from Sh618.04 billion reported at the end of quarter two 2020 to Sh698.05 billion in Q2 2021.

Asset classes with the highest proportions of above five percent were government securities (67.4 per cent), investment property (12.4 per cent) and term deposits (8.3 per cent), the report indicates.