Businesses & Financial News

Insurance sector defy Covid jitters to record Sh144Bn in premiums

By Steve Umidha

Kenya’s insurance industry defied the Coronavirus butterflies to record a 19 percent growth in written premiums to Sh144.02 billion for the second quarter of 2021, compared to Sh121.04 billion the sector registered in a similar period last year.

Concern about possible market readjustments due to the pandemic may have been overblown given the resilience shown by insurers who saw a significant portion of their total assets swell to Sh698.05 billion or 85.2 percent held in income generating investments.

The insurance industry asset base grew by 11 percent to Sh819.65 billion at the end of Q2, 2021 from Sh738.72 billion held at end of Q2 2020, according to the latest data by the Insurance Regulatory Authority (IRA).

General insurance business remained the largest contributor to industry insurance premiums, contributing 59.3 percent of the total premiums at Sh85.36 billion while long-term insurance premiums stood at Sh58.66 billion in the period under review.

Claims incurred in the general insurance business class amounted to Sh32.38 billion during the quarter, a 15 percent jump from Sh28.08 billion the industry reported a year earlier.

Insurance firms have been feeling the pain from increased claims expenses, in a clear indication that is likely to sustain as the year progresses, raising the prospect of consolidation in the industry.

Those fears are being compounded by the dodgy and unpredictable Coronavirus variants seen as a threat to the business ecosystem.

The underwriting business in the same class however, narrowed significantly from a marginal profit of Sh62.45 million in Q2 2020 to a loss of Sh 1.46 billion in Q2 2021 attributed to high increase in loss ratios due to relaxation of restrictions that had been imposed on travel due to COVID-19 pandemic.

“The high premium volume classes of general insurance business contributed the largest proportions of incurred claims; medical (38.7 percent), motor private (29.8 percent) and motor commercial (22.8 percent). Motor classes of insurance business comprised 52.7 percent of total claims incurred compared to their contribution of 27.8 percent of the total premium under general insurance business,” noted the report released yesterday.

Industry claims paid also increased by 16.9 percent to Sh30.60 billion compared to Sh26.17 billion paid in Q2 2020. Medical, motor private and motor commercial had the highest amounts of paid claims at 39.3 percent, 26.9 percent and 21.5 percent respectively of total industry paid claims under general insurance business.

The sector’s total net premium income (NPI) reported by long term reinsurance companies in Q2 2021 declined marginally by 0.9 percent to Sh1.5 billion compared to Sh1.52 billion reported in Q2 2020, while the general reinsurers reported an increase in the net premium income of 13.4 percent from Sh10.73 billion reported by the end of Q2 2020 to Sh12.17 billion in Q2 2021.

“Investments in income generating assets grew by 12.9 percent from Sh618.04 billion reported at the end of Q2 2020 to KES 698.05 billion in Q2 2021. Asset classes with the highest proportions of above 5 percent were; government securities (67.4 percent), investment property (12.4 percent) and term deposits (8.3 percent),” IRA said.

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