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September 20, 2018

Kenya top market for South African insurers

UAP Old Mutual chief fi nancial offi cer Joe Mutugu.group chief executive Peter Mwangi and general Insurance managing director James Wambugu during the Investor briefi ng in Nairobi on March 13,2017/ENOS TECHE
UAP Old Mutual chief fi nancial offi cer Joe Mutugu.group chief executive Peter Mwangi and general Insurance managing director James Wambugu during the Investor briefi ng in Nairobi on March 13,2017/ENOS TECHE

Kenya has emerged as the leading destination for South Africa insurers, latest Insurance report from audit firm PWC shows.

The underwriters ranked Kenya at position one among top five countries they consider their target growth market in Africa.

The others include; South Africa, in second position, Botswana and Mozambique in third and fourth position respectively and Nigeria in position five.

Titled, Ready and Willing; African insurance industry poised for growth, the study attributes Kenyas attractiveness to its High Gross Domestic Products- GDP growth rates and population size.

South Africa operators are slowly expanding outside there countries due to an Intense competition from dominant players.

Of the 52 insurance firms in Kenya is leading South African based Old Mutual which merged with UAP insurance in 2017, Sanlam , and Liberty Insurance that took control of Kenya’s CfC Insurance Holdings in 2010.

While the scramble for Africa's under insured intensifies, regulatory burden, access to distribution, availability of talent, and political stability were identified as the key reasons for low penetration.

South Africa, is Africa's leading country in terms of Insurance penetration at 16.99 per cent while Kenya leads in East Africa at 2.83 per cent. Kenya is ranked sixth in the continent.

Namibia comes in second at 6.69 per cent, Lesotho is third at 4.76 per cent, Mauritius and Zimbabwe come in at position four and five with 4.18 and 4.09 per cent respectively. Countries with the least insured population include Guinea at 0.04 per cent and Chad at 0.20 per cent.

Kenyas insurance sector posted a net premium income of Sh19.63 billion in the first quarter of 2018 compared to Sh19.68 in 2017, data from the Insurance Regulatory Authority shows.

The 2018 first quarter report shows that claims incurred by general insurers were Sh13.97 billion representing a 4.3 per cent decline compared to Sh14.60 billion incurred during Q1 2017.

The report further shows that claims paid by the general insurance business underwriters during the three months period to march 2018 amounted to Sh13.88 billion. The general reinsurance business underwriters paid reinsurance claims amounting to Sh1.37 billion.

Association of Kenya Insurers annual report records that the total industry net claims moved up to 110 per cent from 85.42 per cent.

Speaking to the Star on Phone, BIMA Intermediaries Association of Kenya chairperson Washington Ndegea blamed the regulator for Kenyas slow growth.He said laxity on the regulators side has seen firms not paying claims to their clients but are collecting premiums.

“People are losing confidence in the insurance sector and are opting to take risks because firms are not paying claims hence the penetration will remain low".

Despite the low performance, insurance premiums across Africa are set to go up by up to 3 per cent in 2018. The growth is attributed to the growing middle class with an increased disposable income.

To achieve this exponential growth, the audit firm calls innovative and cost effective ways to increase penetration and drop the traditional, expensive intermediated channels of the past.

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