Insurance sector witnesses rising claims

July 9, 2015
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Total policyholder benefits under life business amounted to Sh13.06 billion during the same period/FILE
Total policyholder benefits under life business amounted to Sh13.06 billion during the same period/FILE
NAIROBI, Kenya, Jul 9 – Business volume expansion in the insurance industry has led to an increase in insurance claims incurred in the first quarter of 2015, eroding premium growth.

According to sector statistics from the Insurance Regulatory Authority (IRA) claims incurred in general business grew by 27.3 percent to Sh12.39 billion from Sh9.73 billion recorded same period last year bringing the claims ratio to 64 percent up from 57.5 percent recorded in 2014.

Total policyholder benefits under life business amounted to Sh13.06 billion during the same period.

The industry recorded a 16.4 percent rise in overall gross premiums during the period to Sh50.41 billion; growing from Sh43.29 billion recorded over the same period last year.

General business which accounted for 68.3 percent of overall premiums grew by 14.6 percent to Sh34.4 billion while the premium income reported under life insurance business amounted to Sh15.98 billion in the period under review representing a 20 percent growth.

Investors’ equity funds amounted to Sh117.86 billion in the period under review representing a growth of 13.5 percent compared to Sh103.83 billion recorded same period 2014.

The shareholders’ funds comprised Sh31.78 billion in paid up share capital, Sh44.58 billion in retained earnings and Sh41.50 billion in other reserves.

“Stronger balance sheet position of insurance companies is likely to improve confidence in the industry with more capital resources being available to cover losses,” the report stated.

The sectors asset base was at Sh452.84 billion as at the end of March 2015 growth of 17.6 percent from Sh385.22 billion held as at the end of March 2014.

The total investments for the industry increased by 20.4 percent to Sh369.67 billion during the period, which was 81.6 percent of the industry’s total assets.

“The investments under life insurance business amounted to Sh237.23 billion, a 64.2 percent of total industry investments while general business investments were Sh132.41 billion a 35.8 percent of total investments for the industry,” the report read.

Commissions paid by the insurers during the period under analysis amounted to Sh2.49 billion compared to Sh2.13 billion reported in quarter one of 2014.

According to IRA’s Insurance Fraud Investigation Unit (IFIU) report, the total numbers of cases reported during the period under review were twenty six (26) amounting to Sh259.71 million.

Commenting on the report, Bima Intermediaries Association of Kenya Chairman Washington Ndegea says the insurance industry has potential for growth if only the primary promoters of insurance in the industry, that is insurance agents, are looked after.

“From the figures, the insurance agents, who number over 5000 and an equal number unlicensed, are doing over 70 percent of the premiums. But the report needs to show how much the agents did in the period so we can know which direction to take in improving the production by agents,” he said.

Ndegea said the industry needs to improve on agents getting paid commissions on time, their commissions not being clawed-back and general training of the agent, among other measures.

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