Motor, medical segments hurting sector
By Issack Awal Mohammed | October 6th 2019
Use of technology could enable insurers to substantially cut their losses in the motor and medical businesses, analysts say.
A new report shows that by deepening the use of technology, the industry can cut losses in the two areas, which have traditionally reported high claims, with a high number of them being fraudulent.
The report by Deloitte noted that last year, the industry grappled with high claims and losses in the motor and medical insurance segments that have become its Achilles heel. The motor private segment of the industry reported 70 per cent claims as medical insurance posted 60 per cent claims. The high claims in the two segments resulted in reduced profits for insurers.
“Motor private and medical business classes are the largest classes. However, they are also among the most loss-making businesses,” read the insurance outlook report 2019/2020 in part.
Rebecca Muriuki, the actuarial and insurance solutions leader at Deloitte said insurance firms in the country don’t have a risk-based approach when it comes to the ‘loss leading’ policy, with the majority of Kenyans treating insurance as a luxury, not a necessity.
“Policies with “bad risks” which should have been priced higher than the standard market rate are priced incorrectly, resulting in underwriting losses,” she said.
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