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Kenya’s Insurance premiums up 13.2p.c in three months to June

Insurance premium elements are a definable risk, a fortuitous event, an insurable interest, risk shifting, and risk distribution.

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Kenya’s insurance industry gross premiums grew by 13.2 percent in the second quarter of 2022 to Sh 163.06 billion compared to Sh 144.02 billion the sector posted in a similar period last year.

The Insurance Regulatory Authority (IRA) – the industry regulator, attributed the growth to the continued economic recovery brought by the negative effect of COVID-19.

“The second quarter (Q2) statistics attributes the growth to the continued economic recovery from the negative effect of COVID-19 in 2020 and 2021,” reads the report.

Statistics for the quarter ended June further show that general insurance premiums also rose by 8.2 percent to Sh 92.40 billion compared to Sh85.36 billion the industry reported in a similar quarter last year.

Medical and motor insurance classes maintained a leading position in terms of contribution in general insurance business premium at 34.5 percent and 28.1 percent respectively.

Only workmen’s compensation and miscellaneous classes are the only classes whose premiums decreased by 10.4 percent and 7.9 percent respectively.

Further, IRA noted that the general insurance business remained the largest contributor to industry insurance premium contributing 56.7 percent of the total premium.

Motor insurance and medical insurance classes of business account for 62.5 percent of the gross premium income under the general insurance business.

“The general insurance business underwriters incurred claims amounting to Sh37.09 billion as at end of Q2 2022. The claims incurred loss ratio was 68.1 percent in the quarter under review compared to 66.8 percent in Q2 2021,” the report indicates.

Insurers also made substantive losses during the quarter, paying claims worth Sh 34.51 billion as opposed to Sh30.60 billion paid in the same quarter last year – representing an increase of 12.7 percent.

Medical, motor private and motor commercial had the highest amounts of paid claims at 44.4 percent, 25.2 percent and 20.7 percent respectively of total industry paid claims under general insurance business.

The industry still struggles with rampant cases of insurance premium undercutting – a practice that has seen an increase in premium payouts in the last months.

Premium undercutting is the practice where an insurance company secretly offers clients unrealistically low premiums in order to gain a competitive advantage and protect their market share.

The inability to pay claimants has largely been linked to undercutting of premiums among players who now feel the effects of years of price competition that has left many unprepared for the cost of claims.

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