Motor insurance loss rises seven-fold to Sh693.8m in 2013

dead end: Naivasha traffic boss Roy Njeru examines accident vehicles that killed a Nakuru trader in 2013 .
dead end: Naivasha traffic boss Roy Njeru examines accident vehicles that killed a Nakuru trader in 2013 .

MEDICAL insurance has made a profit for the first time ever, as motor private continued to register losses which rose by a whooping 608.7 per cent to Sh693.8 million.

According to the Insurance Regulatory report for 2013 released yesterday, underwriting loss for motor private insurance was seven times more than in 2012 when this class recorded a loss of Sh97.92 million. Figures by Association of Kenya Insurers which uses audited results of its members show a higher loss of Sh746 million for motor private.

This is despite the introduction of the no claims discount and standardisation of premium rates meant to

reward good drivers and stop price undercutting in the motor class, which players blame for the serial losses. Motor private was the only class of insurance to record a loss last year.

"Many did not embrace no claims discount rule in 2013 but from May 1, 2014 enforcement is at top level and therefore we expect that the performance of motor business will improve," said AKI executive director Tom Gichuhi.

The report shows general insurance business had an underwriting profit of Sh3.4 billion last year, a 9.5 per cent increase from 2012 when it made Sh3.1 billion despite the massive losses recorded by motor private. The motor private class has persistently recorded underwriting losses since
2009 except in 2011 when it made an underwriting profit of Sh278.95million.

Medical insurance, also a serial loss maker turned around last year to post Sh282.5 million profit from a loss of Sh277.2 million recorded in 2012. AKI attributed this improvement to better claims management through increased vigilance where some companies have employed doctors to peruse invoices to detect any overcharge or unnecessary medical procedures charged on them and increase in coverage of health insurance.

"General insurance underwriting profits rallied to an all-time high of Sh3.4 billion. This is despite the underwriting losses from motor private class. However, the high premium medical class registered a profit for the first time," said IRA chief executive Sammy Makove, in a statement accompanying the report.

In contrast to motor private, the motor commercial insurance class made a profit of Sh1.4, the highest out of all the 13 categories of business in the local industry.

Claims incurred by the industry in general insurance business rose 16 per cent to Sh34.2 billion from Sh29.5 billion previously. Both motor classes accounted for 52.8 per cent of the claims taking up Sh18.05 billion while 27.1 per cent of the claims was attributed to medical with Sh9.26 billion.

Aviation insurance had registered the highest loss ration in the period under review at 183.3 per cent compared to 16.8 per cent it recorded in 2012.

This ratio is calculated as a percentage of the income from premiums over total claims.