High insurance claims drive losses to 172 pc, says IRA

Insurance firms reported deepened underwriting losses in the general business during the first quarter of 2017 at 172.69 per cent on increased claims and higher management costs.

Data by the Insurance Regulatory Authority for the three months ending March 2017 indicated that losses from underwriting business rose to Sh453.74 million compared to Sh166.39 million during the same period last year.

Increased claims, which contributed to loss deepening by general business underwriters during the period, rose 5.26 per cent Sh14.6 billion, up from Sh13.87 billion last year.

“The loss ratio under general insurance for the period under review was 65.1 per cent compared to 64.2 per cent during the same period last year,” IRA acting chief executive Godfrey Kiptum said yesterday.

“There is more room for growth in the long-term business than in the general business.”

The claims, coupled with increased management expenses, resulted in a 28.27 per cent decline in after tax profit in the general insurance business during the period to Sh986.76 million from Sh1.38 billion reported in the previous year.

“Underwriting expenses comprise of expenses of management and commissions. Management expenses grew by 11.9 per cent from Sh8.68 billion reported in the first quarter of 2016 compared to Sh9.71 in the corresponding period in 2017,” Kiptum said.

During the period under review, the net spending on commissions dropped 6.41 per cent to Sh2.92 billion from Sh3.12 billion last year.

“Gross premiums grew by 14.4 per cent. This was an accelerated growth compared to the 9.6 per cent growth witnessed during the same period last year,” Kiptum said.

“The growth was largely driven by the long-term segment which grew by 24.8 per cent compared to a 9.6 per cent growth in the general business segment.”

Gross premiums in the long-term business segment rose 522.61 per cent to Sh1.21 billion for the January-March period compared to a loss of Sh286.24 million last year. Premiums from the general business segment went up 9.61 per cent to Sh41.56 billion from Sh37.92 billion last year.

Kiptum said that the authority has rolled out a consumer education programme that will run over the next three years aimed at boosting insurance uptake across the country.

“We are also working on programmes on inclusiveness that will include micro-insurance products, the development of a micro-insurance framework that we expect to roll out in the coming year or before the end of this year,” Kiptum said.