General insurers’ net profit for the first nine months of last year rose 57.6 percent to Sh9.73 billion as increases in investment income helped offset the poor performance from the underwriting business in the review period.
Latest data from the Insurance Regulatory Authority (IRA) shows the net profit rose from Sh6.17 billion posted in the preceding period, marking one of the best nine-month performances in years.
The review period saw investment income rise by 34.8 percent to Sh10.95 billion from Sh8.12 billion while net earned premium increased by 14.5 percent to Sh95.2 billion.
Net premiums earned refer to the total amount of premiums an insurance company considers as belonging to it depending on how much time has passed on the policy to its effective life.
General insurers, however, suffered underwriting losses in the mainstay business of insurance, with underwriting loss in the review period widening by 80.9 percent to Sh4.1 billion as a performance from medical and motor vehicle covers worsened further.
The IRA data shows general insurers’ underwriting loss worsened from Sh2.26 billion that had been posted in the preceding similar period as premiums paid surged from Sh53.3 billion to Sh60.5 billion. Underwriting loss is the difference between premiums collected and claims plus expenses incurred such as commissions.
Motor insurance made up of private and commercial vehicles, returned an underwriting loss of Sh5.6 billion, a 21 percent rise from Sh4.63 billion.
Commercial vehicles had the worst nine-month performance ever since the IRA started disclosing the data. The loss more than doubled from Sh1.75 billion to Sh3.21 billion, coming in the period many insurers had complained of increased spending on claims due to a rise in the cost of spare parts as the shilling weakened against the dollar.
Underwriting losses from insuring private vehicles improved from Sh2.89 billion to Sh2.39 billion in the period medical insurance business returned a Sh1.4 billion loss—a 63.7 percent rise from Sh849.3 million.
Medical, motor private and motor commercial had the highest amounts of paid claims at Sh27.63 billion, Sh13.68 billion and Sh12.61 billion, respectively, of total industry-paid claims under the general insurance business. The three classes jointly make up 89.1 percent of all claims paid by general insurers.
The period under review saw general insurance premiums grow by 14.4 percent to Sh153.72 billion, with motor and medical leading in terms of contribution in premiums at 35.2 percent and 27.8 percent, respectively.
Six insurers—Old Mutual General, APA, GA, CIC General, Britam General and Jubilee Health—jointly controlled 47.7 percent of total gross premium income under the general insurance business.
Medical and motor insurance have been perennially problematic for general insurers mainly blamed on poor pricing and fraudulent claims.
Many insurers have been aggressive in revising premiums upwards to reflect the level of risk in the market and also dropping comprehensive covers for some models of vehicles deemed too risky.
There have also been insurers adopting telematics—in-car monitoring devices— to adjust premium rates based on policyholders' mileage and driving habits.
