Prospects dim for general insurers
News
By
Lee Mwiti
| Jun 22, 2018
Companies in the general insurance business face tough times ahead as competition increases for a diminishing market.
Stringent regulations and a slow economy, which adds to the overcapacity in the industry – the existence of many insurers competing for a small market share – will affect the companies.
This is according to a report by audit firm Deloitte dubbed Unlocking the Potential: Insurance Outlook Report for East Africa 2018. “Insurers in the general business started 2018 on a strong financial base with net assets at their highest level in the history of the industry. However, overcapacity is undermining profitability, as seen by falling net income and return on equity,” the report says.
“In 2018, a slow-growth economy together with high capacity is expected to continue exerting downward pressure on premium rates and consequently return on equity, as insurers compete with new and existing players for market share.”
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However, life business has better prospects. Deloitte says an increase in demand for retirement solutions as life expectancy in Kenya goes up has driven up the pension market.
“There has been a rapid growth in the life insurance market relative to the nominal gross domestic product. Pension and ordinary life are expected to continue driving the growth of the industry,” says the report.
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