LETTERS: More queries than answers from insurance figures

Insurance continues to be the bedrock of any economy and our economy is no exception. It is said that the higher the performance of any economy the higher the uptake of insurance in that economy.

Insurance works as a cushion in case of any accidental loss and loss of earnings by an individual by quickly bringing the individual back on their feet.

That is why any data from the Insurance Regulatory Authority (IRA) needs to be interrogated seriously as it is our economy and our progress we are talking about.

A cursory look at the figures in the fourth quarter release covering the period January to December 2017 show a grim picture on general insurance where there has been a drop on growth of premiums of only 2.5 per cent.

This is against the usual growth over the years of over 10 per cent. I guess this could be attributed to the long electioneering period where people wanted to hold onto their money for as long as possible because of the uncertainty.

But then this brings us to the other question: Wouldn’t it be prudent to insure yourself more in case of uncertainty than holding onto your money, or is it that Kenyans’ don’t trust anyone else with their money, especially insurance companies?

Another look at the figures shows that marine insurance business actually made an improvement to hit Sh3.6 billion, a rise of 39.7 per cent.

But this is way below the projected earnings of a minimum of Sh20 billion the industry expected to earn especially when marine cargo insurance was made compulsory from January 2016 that all local imports and exports were to be insured locally. The authorities need to go back to the drawing board on this one.

Insurance commissions’ payout continue to decline in a worrying trend that is threatening to tear the industry apart. Premium income in life business in 2017 increased by 13.56 per cent to Sh82.9 billion from Sh73.1 billion.

In the same period commissions paid out dropped by Sh241 million or a drop of 4.3 per cent. Where did these other commissions go to? The natural progression would have been an increase of the same margin. The complaints reaching our desk regarding stolen commissions are now being proved in these figures.

The most shocking from the report was that general insurance business actually made a profit despite the marginal growth experienced last year. That was a profit of some Sh556 million.

In 2016, general insurance made a staggering loss of Sh2.13 billion. The previous year saw a loss of Sh226 million.

The profits were mainly realised by the growth of medical insurance business by a whopping Sh1 billion.

We need to remember that medical insurance has always made losses over the years and the last three years saw the industry make a combined loss in medical of Sh1.364 billion with 2016 alone accounting for Sh849 million. This year medical insurance sector made a profit of Sh608 million. This result is one of the major reasons general insurance made profits this year of Sh556 million.

But what could have prompted medical insurance business to make such a difference in results? This cannot be good.

There have been a lot of complaints against the industry regarding medical insurance the dirtiest being there are companies that discharge their patients from hospitals when the doctor has said they should remain.

This of course reduces the amount of money spent by a patient. But they should not compromise on the quality of healthcare with such acts. Could insurance companies be insisting on their clients being treated with cheap inferior drugs or other ways of cutting costs?

Could also the insurance companies have so improved on fraud detection mechanisms that they are able to cut costs by that kind of margin?

Such worries and fears should be laid to rest and a proper explanation given that actually our healthcare system is not being compromised for the sake of profits.

Washington Ndegea, chairman, Bima Intermediaries Association of Kenya.