NAIROBI, Kenya
The insurance industry registered an improvement of 18% in gross written premiums to Ksh108.54 billion in 2012 from Ksh91.60 billion in 2011 despite slow growth in market penetration.
According to the 2012 Insurance Industry Report released this week by the Association of Kenya Insurers (AKI), the insurance market expanded by a paltry 14 percentage points to 3.16% in 2012, up from 3.02% in 2011. Margins were driven mostly by the traditional motor, medical and fire insurance segments.
The growth was also attributed to the introduction of innovative products, improved regulatory framework, adoption of alternative distribution channels and the enhanced use of technology. The report shows that (short term) general insurance still takes a huge chunk of the insurance market pie at 66% while long term (life insurance) stood at 34%.
Kenya is ranked fourth in the Africa in insurance penetration behind South Africa, Namibia and Mauritius. AKI Executive Director Tom Gichuhi attributed the slow growth to a number of factors, key among them unhealthy competition leading to price undercutting, consumer apathy as a result of the poor image of the industry, fraud and low levels of consumer awareness.
The Cabinet Secretary for National Treasury Henry Rotich indicated in his Budget speech in June that there were plans to introduce excise duty in the industry. But AKI says this would be counterproductive. “Major changes have been introduced to the Insurance Act and other legislations. In as much as a good number of these changes will impact positively in the area of corporate governance, others will impact negatively on a number of insurance companies,” said Gichuhi.
Currently, Africa registers the lowest contribution to the global insurance premium at 1.6%, while the average insurance penetration on the continent stands at 3.6%. Life insurance premium in Africa is estimated to have increased by an impressive 14% to some $ 50 million in 2012. South Africa is the big boy in the industry on the continent, accounting for about 90% of all insurance premiums.
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