By John Oyuke
The Ongoing reforms in the insurance industry have begun to bear fruits, with underwriters fetching better premiums.
The industry registered a 16 per cent growth in premiums, which rose to Sh91.6 billion last year, compared to Sh79.06 billion in 2010, though gaps in performance of business classes still depict lurking danger.
According to the recently released Kenya Insurance Industry Annual report 2011, gross written premiums for non-life insurance rose to Sh60.67 billion in 2011, compared to Sh52.35 billion in the previous year.
Life insurance premiums on the other hand rose to Sh30.93 billion from Sh26.71 billion during the periods under review.
Players are convinced the increase in premiums, written and assumed by insurers before deductions for reinsurance and commissions suggest reforms have started to pay-off.
AKI Chairman Mark Obuya said the sector’s growth prospects appeared brighter, buoyed by initiatives such as improved regulatory framework and innovative products. Others are adoption of alternative distribution channels, enhanced public education and use of technology to improve levels of penetration.
“The sector is gearing for higher growth due to the untapped potential and the unlocking of past regulatory barriers that are expected to come along with the review of the Insurance Act,” said Obura.
New rules
According to the report, private motor vehicles made an underwriting profit of Sh320.49 million for the first time in more than seven years, after new rules on premiums and underwriting were introduced in 2010.
“This is a remarkable achievement given the high cases of accidents and fraud associated with this class. It is as a result of the integrated motor insurance data system that was introduced and the non-claims discount offer,” observed Obuya.
In 2004, the private motor vehicle class made an underwriting loss of Sh294.79 million, in 2005. The loss rose to Sh728.16 million, then dropped to Sh568.54 million the following year.
In 2007, 2008 and 2009, the class made an underwriting loss of Sh709.77 million, Sh1.19 billion and Sh1.208 billion respectively.
Last year, only nine of the 36 companies that offer private motor insurance made losses compared to 10 that made a profit from the class in 2010 when the line incurred an underwriting loss of Sh912.64 million.
AKI Executive Director Tom Gichuhi attributed the continuing industry growth to the introduction of new products, especially those geared towards advancing micro-insurance.
He pointed out that business consolidation enabled the insurance companies to manage their businesses better, with specific focus on their lines of business.
