Insurance Companies Lost Ksh 3 Billion On Motor Cover

A report released by the Association of Kenya Insurers (AKI) indicates that general insurance companies lost about 3.27 billion shillings in underwriting loss.

According to the association, the loss is the worst in over 20 years, hitting the sector that has been struggling to leave a mark with fewer Kenyans taking up covers.

Kenya’s insurance sector has long been associated with fraud and frustrations especially when beneficiaries are seeking claims, something that has always locked away potential clients.

The difference between premiums collected and claims plus expenses— last year jumped from the previous year’s Sh1.12 billion. Underwriting losses from insuring motor vehicles jumped by 92.4 percent to 7.35 billion shillings.

Most insurance companies in Kenya rely on motor insurance for survival. This is because motor insurance in Kenya is a must and anybody who owns a car is supposed to have it insured.

“Although the segment is experiencing growth in terms of premium income, there is a persistent recording of underwriting losses for the past five years,” says AKI in their latest report.

The association added that the motor vehicle segment of insurance continues to report underwriting losses as a result of premium undercutting an effort by insurers to reserve market share.

Underwriting losses from private vehicle covers rose by 72 percent to 4.67 billion shillings while losses from commercial vehicles increased 139 percent to 2.66 billion shillings. 30 companies made losses from insuring private vehicles last year compared to 23 companies the previous year.

Despite what has been described as a low penetration rate of insurance services in Kenya, the country is still ahead of other East African countries in terms of insurance penetration.

The Insurance Penetration in Kenya currently stands at 2.37 percent followed by Rwanda at 1.70 percent. Uganda is third with 0.84 percent while Burundi comes in fourth with 0.77 percent. Tanzania has 0.53 percent while Ethiopia has 0.40 percent.

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