Insurance premiums in Kenya rose by 18.5% in the fourth quarter of 2021 to hit Ksh276.06 billion up from Ksh232.94 billion in the same period the previous year.
In its latest report, the Insurance Regulatory Authority (IRA) attributed the increase to economic recovery from the impact of Covid-19, which in 2020 hit the industry hard.
The industry’s after-tax profit hit Ksh8.65 billion by the end of Q4 2021, a 0.4% decline from Ksh8.69 billion reported by end of Q4 2020.
Long term insurance business premiums amounted to Sh123.71 billion accounting for 44.8 percent of the total industry premium while general business premiums amounted to Sh152.35 billion (55.2%). In 2021, long term insurance business premiums accounted for 44.8 percent of the total industry premium and general business premiums accounted for 55.2% as compared to contributions of 43.8% and 56.2% for long term and general respectively in 2020.
Notably, several insurers announced hiked premiums particularly for motor vehicle insurance in 2021. They announced rate increases of up to 50% in December 2021 for both third party and comprehensive covers, attributing the decision to increased claims and mounting losses due to fráud.
The High Court suspended the increase of motor vehicle insurance premiums in January, pending the determination of a case filed by the Kenya Human Rights Commission. The new IRA report on Q4 highlighted how the vehicle insurance market was driving increased underwriting losses.
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“General insurance business underwriting results was a loss of Sh6.34 billion in Q4 2021 which was a huge increase from a loss of KES 1.18 billion reported in Q4 2020. The increase in underwriting losses is mainly attributed to an increase in underwriting losses in motor private and motor commercial classes of insurance business due to relaxation of restrictions that had been imposed on travel due to COVID-19 in 2020,” IRA noted in a statement.
Life Assurance gross premium income increased by 15.3% from Ksh29.57 billion reported in Q4 2020 to Ksh34.11 billion reported in Q4 2021.
This growth was largely driven by GA Life Assurance, ABSA Life Assurance, Britam Assurance, and Kenindia Assurance Company limited whose life assurance business increased substantially during the year 2021.
Investment income under long-term insurance business increased significantly to Ksh51.76 billion as at the end of Q4 2021, up from Ksh35.86 billion in Q4 2020 – attributed to fair value gains in equities. The fair value gains in equities may be mainly attributed to the capital market gains as the market recovers from the effect of COVID-19.
“With economic recovery post COVID-19 in other sectors we remain optimistic that the insurance sector will also recover in due time,” IRA stated.
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