Claims on personal cars and matatus push 17 insurers into losses

Huge claims on personal cars and matatus pushed nearly half of insurance companies into underwriting losses.

Some 17 of the 36 insurance companies took a beating from increased claims from the two classes. Overall, the industry plunged into an underwriting loss of Sh226.2 million. According to the Insurance Regulatory Authority (IRA), the industry suffered a loss of Sh3.1 billion as claims on personal cars exceeded the premiums collected.

The matatu industry also added to their pain contributing a further underwriting loss of Sh662.5 million. Underwriting losses which come about as result of claims paid out exceeding premiums collected were also on medical (Sh118 million), aviation (Sh59.4 million) and fire (Sh20.1 million).

Britam General Insurance was the biggest casualty suffering an overall loss of Sh728.2 million. Despite positive performance in medical and personal accident covers, the insurer incurred a Sh749.2 million loss on personal cars.

Others were Gateway Insurance (Sh512.5million), Resolution Health (Sh381.9 million), Directline Assurance (Sh292.5 million), UAP (Sh292.8 million), and Cannon Assurance (Sh126.3 million). Also on this list are African Merchant, Allianz, Fidelity Shield, Geminia, Kenindia, Pacis, Saham, Takaful, Trident and Xplico.

In the same period under review, fraudsters continued to torment the insurance industry denying insurers millions in revenues.

Cases of fraud in the insurance sector increased by 22 per cent from 87 in 2014 to 106 last year making a mockery of various efforts that have been put in place by IRA to tackle the vice.

Falsified claims

The insurance sector lost a total of Sh366.9 million from fraud in 2015 up from Sh102.7 million reported in the previous year. Most of the fraudulent claims were of motor damage or theft with 20 of such claims reported in the year. These cases might be the tip of the ice-berg. According to a recent KPMG report, most cases of fraud in insurance sector go undetected.

“Suitable fraud management strategies may need to be incorporated in the entity’s overall risk management framework if the underwriters are to remain profitable by mitigating the risk of falsified claims and other forms of insurance fraud exposures,” read part of the report.