The report attributes the drop to the rebasing of Kenya’s Gross Domestic Product (GDP) in the period under review.
During the period, Kenya’s GDP rose by 25 percent to Sh4.76 trillion following the government’s rebasing (new formula to calculate GDP) of the economy from the previous Sh3.8 trillion (which was rebased in 2001).
The rebasing lifts average per capita income in Kenya to $1,246 effectively meaning that the country moves to lower middle income status.
AKI Chairman Justus Mutiga however says the starting of bancassurance by several financial institutions as well as introduction of agriculture insurance and micro insurance will turn around insurance uptake.
“The low penetration highlights the significant opportunities that exist in the Kenya insurance market especially in commercial lines such as oil, real estate and infrastructure. Micro insurance, bancassurance and agriculture Insurances are in the early stages of development and they will be key in increasing insurance penetration,” Mutiga said.
Combined industry profit before tax decreased by 13 percent to Sh15.46 billion in 2014 against 17.79 billion recorded in 2013.
Overall gross written premiums increased by 20.3 percent in the period under review to Sh157.1 billion compared to Sh130.65billion in 2013.
Gross written premiums for non-life insurance stood at Sh100.24 billion against 86.64 billion in 2014 representing a 15.6 percent growth while that for the life insurance was at Sh56.7 billion against 2013’s Sh44.1 billion, a 29.4 percent growth.
During the period the industry recorded incurred net claims of Sh82.36 billion in 2014, compared to Sh56.47 billion in 2013 representing a 25 percent increase.
In life insurance net claims for 2014 amounted to Sh33.59 billion compared to Sh23.09 billion in 2013 a 45 percent increase.
Net claims incurred in non-life insurance amounted to Sh42.6 billion, a 22.4 percent increase compared to Sh34.8 billion in 2013.
Overall, Industry earnings from investments and other income increased by six percent from Sh42.76 billion in 2013 to Sh45.55 billion in 2014.
Mutiga expects continued mergers and acquisitions in the industry going forward just as experienced in 2014.
“With the increase in minimum capital requirements for general insurance companies to Sh600 million and the Sh400 million for life Insurance companies by Treasury, we expect the trend of Mergers and acquisitions to increase as more local companies seek funds to continue operations, ” he added.