, NAIROBI, Kenya, Aug 26 – Most Kenyans remain locked out of insurance services with penetration increasing marginally from 3.02 percent in 2011 to 3.16 last year.
According to the Insurance Industry Annual Report by the Association of Kenya Insurers (AKI), the slight growth in the sector was due to several initiatives by the players, including improved regulatory framework, innovative products, public education and use of technology.
AKI chairman Mark Obuya however lamented that the growth was still too slow and much more needs to be done by all stakeholders to increase penetration.
He attributed the slow growth to poor image of the industry, fraud and low level of consumer awareness.
“There is a positive movement but not to the level we that we are proud of. We still have a long way,” Obuya said while officially launching the report on Monday.
The industry incurred net claims totalling Sh48.43 billion in 2012 compared to Sh37.7 billion in 2011 representing an increase of 28.3 percent.
Obuya said the huge growth in claims was due to high number of fraudulent claims which he said stood at 40 percent currently with the most affected areas being the motor private classes and the medical insurance.
According to the report, medical insurance and motor private classes’ loss ratio stood at 78 percent and 65 percent respectively.
“The motor private class of insurance made a technical net loss of Sh100 million compared to underwriting profit of Sh320 million in 2011. Though it was an improvement, the medical insurance still made losses of up to 336 million in 2012 from Sh650 million previously,” Obuya said.
He challenged the players to focus on the use of technology to be able to curb fraud.
“We have these medical care providers who recommend their clients for a bed rest in the hospital for three days when they really don’t need it. Sometimes there is patient kiting where you go through unnecessary medical procedures hence increasing charges. The use of technology can actually help us detect some of these malpractices,” Obuya said.
Total commissions and expenses for the industry increased by 29.8 percent from Sh27.3 billion in 2011 to Sh35.4 billion last year.
Despite the challenges facing the sector, the industry recorded gross written premiums of Sh108.5 billion in 2012 compared to Sh91.6 billion in 2011, representing a growth of 18.5 percent.
Non-life insurance premium grew by 17.8 percent while life insurance premium and contributions from deposit administration and investment linked contracts grew by 19.8 percent.
Out of the 46 insurance companies included in the report nine made losses.