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By Steve UMIDHA
The value of insurance business underwritten by local players or bancassurance grew by 79.4% in premiums in the year ended December 2023, significantly outpacing the overall insurance industry’s growth of 56.2% during the same period.
This surge, according to a report by the Association of Kenya Insurers (AKI) is particularly notable in the non-life insurance sector, which saw a 72.2% increase through bancassurance, compared to a more modest 43.4% growth in the broader industry.
Aki report shows that 21 out of 24 bancassurance intermediaries reported increases in premiums between 2019 and 2023, with nine intermediaries more than doubling their premiums during this period.
By the end of last year, intermediaries generating over Sh1 billion in premiums commanded 83.5 percent market share.
“While bancassurance has experienced strong growth, it is now facing emerging profitability pressures. Claims have surged from KES 6.55 billion in 2019 to KES 14.16 billion in 2023, closely mirroring the rapid increase in premiums.
This trend raises concerns about underwriting practices and claims management, particularly evident in the non-life insurance segment, where the loss ratio escalated from 43.9% to 52.0%,” it noted.
Bancassurance is a partnership between a bank and an insurance company that allows the bank to sell the insurance company’s products to its customers. The term is a combination of the words “bank” and “insurance”.