Most insurers have no capacity to pay claims, says report

Your insurer could be delaying paying your claim for the simple reason that they have no money.

A new survey released on Wednesday has revealed a majority of insurance companies in Kenya are operating in the red with almost no disposable capital in case of any shocks in the market.

The report by Kenbright Actuaries presented at the opening of the Actuarial Society of Kenya's (TASK) Actuarial Convention 2017 in Nairobi says insurers have been spending more cash than necessary in spreading their risks at the expense of policyholders.

Such investments include bonds, shares and assets in real estate.

Win more clients

Other reasons given for the diminished solvency level for local insurers are operational and credit capital risks, which are compounded by failure to collect premiums despite issuing insurance contracts in a bid to win more clients.

The survey found that the solvency level or level of capital of local insurers is very low.

According to the survey, while the market risk demands a Capital Adequacy Ratio (CAR) of at least 200 per cent as per the Insurance Regulatory Authority (IRA) requirements, the industry operates at an average of 131 per cent. The 131 per cent is for General Insurers while 124 per cent is for Life Insurers (LI). CAR is simply the amount of money required for the provider to operate in the market versus the amount they actually have.