Insurers grapple with slow growth of premium income

Former Insurance Regulatory Authority CEO Sammy Makove with Continental Reinsurance Director Femi Oyetunji in Nairobi on 11 October, 2018. [David Njaaga, Standard]

Insurers both in the general and long-term business are feeling the heat of a sluggish industry as premiums grow at a slow pace.

Latest data from the Insurance Regulatory Authority (IRA) shows that general insurance gross premium income stood at Sh71 billion as of June 31, 2018.

This compares to Sh68 billion in the same period last year.

The rate of growth, however, tells a different story with the premiums increasing by 4.5 per cent in the first quarter of this year, compared to 6.3 per cent in the same quarter in 2017.

Long-term business also experienced a similar fate.

The segment recorded Sh41.4 billion as of June 31 2018, having posted Sh41.1 billion in 2017.

The rate of growth this year, however, was 0.7 per cent, while in 2017, it stood at 26 per cent. According to the IRA, during the same period, the claims incurred amounted to Sh29.21 billion.

This was an increase of two per cent from the Sh28.6 billion reported at the same time in 2017.

“Medical insurance, motor private and motor commercial were the largest contributors to the claims incurred with each contributing 33.6 per cent, 24.8 per cent and 24.4 per cent respectively,” IRA data read in part.

In the reinsurance business, net premium income for the second quarter of 2018 amounting to Sh7.6 billion. This was a decline of 7.3 per cent, compared to Sh8.2 billion at a similar period in 2017.

Claims that were registered by the re-insurers stood at Sh4.3 billion. The three reinsurance companies operating in the country are Kenya Reinsurance Corporation, Continental Reinsurance and East African Reinsurance.

Investments by insurers and re-insurers grew by 12.5 per cent to Sh509.7 billion in quarter two, from Sh450.7 billion reported in the second quarter of last year.

Asset classes with the highest investment proportions were government securities at 57.3 per cent investment property at 15.9 per cent, equities 9.4 per cent and term deposits 7.2 per cent.

Industry assets in the period under review grew by 10.7 per cent to Sh627 billion from Sh564 billion held last year.