High claims dented gains made in the insurance sector in quarter four of 2021, industry data shows, as underwriters navigated through the Covid-19 pandemic.
The Insurance Regulatory Authority (IRA) data shows insurance premiums in the fourth quarter (Q4) of 2021 grew by 18.5 per cent to hit Sh276.06 billion, up from Sh232.95 billion recorded in the same period in 2020.
However, the sector recorded an increase in claims and policyholders’ benefits that saw losses deepen mainly in the general insurance business, which recorded a loss of Sh6.34 billion, compared to Sh1.18 billion in Q4 2020.
This was mainly attributed to high increase in underwriting loss in motor vehicle classes due to relaxation of restrictions that had been imposed on travel due to Covid-19 pandemic.
Motor private made an underwriting loss of Sh6.17 billion while motor commercial posted an underwriting loss of Sh3.32 billion.
The growth in premium on the other hand is attributed to economic recovery from the effect of Covid-19 which negatively impacted the growth of insurance businesses in 2020.
Long-term insurance business premiums amounted to Sh123.71 billion, accounting for 44.8 percent of the total industry premium while general business premiums amounted to Sh152.35 billion (55.2%).
The industry paid claims amounting to about Sh164.1 billion, cutting across long-term insurance business (Sh81 billion up from Sh67.8 billion), general insurance (Sh70.1 billion up from Sh57.4 billion) and general reinsurance, which paid Sh13.8 billion in claims.
Medial accounted for 38.5 per cent of claims, motor private (27.7%) while motor commercial accounted for 22.8 per cent, forming the top three segments that hit insurance companies.
The period under review also came with a high number of registered complaints (382 ), and 34 insurance fraud cases.
General insurance business accounted for 77 per cent of the complaints whereas 23 per cent were made against long-term insurers.
“Motor classes of insurance business incurred claims contributed 50.5 per cent of total claims incurred compared to their contribution of 33.8 per cent of the total premium under general insurance business,” IRA notes in its quarterly report.
Over the period, 110 (37.4 per cent ) complaints against general insurers were resolved while 57 (64.8 per cent) complaints against long-term insurers were resolved.
The number of fraud cases reported to the Insurance Fraud Investigation Unit (IFIU) each month of Q4 2021 were 12 in October, 19 in November, and three in December.
The regulator however remains confident Kenya’s insurance sector is on the recovery trajectory as relaxation of restrictions such as local and international travel continues to spur international trade, especially on the movement of people and goods.
There are 56 insurance companies operating in the country with five re-insurance firms.
Total investments under long term insurance business as at end of December 2021 amounted to Sh 524.1 billlion, an increase of 13.5 per cent compared to Sh461.9 billion reported as at end of Q4 2020.
Kenya government securities (treasury bills and bonds) maintained their attractiveness to long-term insurers comprising 76.4 per cent (Sh400.38 billion) of the total long term insurers’ investments.
Total investments under general insurance business as at end of Q4 2021 amounted to Sh143.88 billion indicating an increase of 8.8 per cent from Sh132.19 billion reported in Q4 2020.
Kenya government securities (treasury bills and bonds) and investment property accounted for highest proportions of total general insurers’ investments at 54.7 per cent and 17.7 per cent, respectively.
“With economic recovery post Covid-19 in other sectors we remain optimistic that the insurance sector will also recover in due time,” IRA said in a statement yesterday.
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