Medical insurers return to profit

Association of Kenya Insurers Executive Director /CEO Tom Gichuhi during the interview at AKI offices. [File] 

Medical insurers have clawed back from the red to record a Sh204 million underwriting profit for the year 2019 compared to a Sh1.08 billion loss the previous year.

Industry experts attributed the improved earnings to prudent claims management, increased premium earnings and good pricing. This was during the release of an annual report by Association of Kenya Insurers (AKI) in Nairobi yesterday.

The return to profitability comes amidst losses for non-life insurance underwriting, which widened to Sh3.27 billion in the period under review, compared to Sh2.86 billion in 2018.

“Medical insurers have become more prudent in claims management and also improved in areas of pricing,” said AKI Executive Director Tom Gichuhi. Of the 13 classes of non-life insurance, the motor class continued to pull down the industry with a loss of Sh7.3 billion.

Motor private recorded the highest loss of Sh4.7 billion - doubling from Sh2.7 billion in 2018 while motor commercial recorded a loss of Sh2.68 billion in 2019 from Sh1.12 billion in 2018.

“Motor is pulling down the general insurance business. It contributed to 36 per cent of the total premiums but also contributed to over Sh7 billion in losses,” said Gichuhi. Net incurred claims increased by 5.67 per cent to Sh117 billion in 2019, up from Sh111 billion in 2018.

Even as insurers post losses from their core business of underwriting, investment income remained a top earner, rising 39.06 per cent to Sh69.9 billion during the period under review, up from Sh50.23 billion in 2018.

This saw the industry’s profit before tax rise by 311 per cent to Sh18.09 billion in 2019 from Sh4.4 billion in 2018.

Net income for the period grew 14.4 per cent to Sh211.7 billion in 2019 up from S185.04 billion in 2018.

The industry’s total assets grew 8.8 per cent to Sh686 billion in the year under review. Insurance penetration continued to plummet for the fifth consecutive year to 2.37 per cent in 2019 from 2.43 per cent in 2018.

The industry recorded a seven per cent growth in gross written premiums to Sh231 billion in 2019 compared to Sh216 billion in 2018.