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Insurers report first medical underwriting profit in three years
The performance is a shift from a similar period in 2023 where 13 insurers posted an underwriting loss from medical insurance as eight posted a profit.
General insurers have posted underwriting profit from medical insurance covers for the first time in three years, offering a boost to a segment that has been struggling to stem out fraud from this business.
Latest Insurance Regulatory Authority (IRA) data shows insurers posted a Sh397.23 million underwriting profit in the half-year ended June 2024, marking an improvement from a loss of Sh399.7 million they made in a similar period in 2023.
The Sh397.23 million underwriting profit —premiums remaining after claims have been paid and administrative expenses deducted— is the first profit in this class of insurance since the Sh80.43 million posted in the year ended December 2021, helped by Covid-19 disruptions that put off many people from visiting hospitals.
The improved performance came in the period premiums from medical insurance rose 22.8 percent to Sh46.3 billion, cementing its position as the top contributor to the general insurers’ Sh117.67 billion premiums collected in the six months.
Claims paid to settle medical bills rose 24.4 percent to Sh21.69 billion. The underwriting profit from medical business shows insurers contained underwriting management expenses during the review period, lifting them from the loss position.
IRA data shows 14 of the 21 medical insurers posted underwriting profits in the half-year under review, with the highest coming from Old Mutual (Sh593.57 million), APA Insurance (Sh422.66 million), Trident (Sh254.1 million), Jubilee Health (Sh159.71 million) and Heritage (Sh105.1 million).
The performance is a shift from a similar period in 2023 where 13 insurers posted an underwriting loss from medical insurance as eight posted a profit.
Medical insurance has been persistently a loss-making business for insurers mainly due to fraud and price undercutting. The only exception was during Covid-19 disruptions that lasted between 2020 and 2021, grounding many people indoors and reducing hospital visits.
The reduced hospital visits due to lockdowns and the fear of contracting the infectious virus had seen insurers post an underwriting profit of Sh1.29 billion in the year ended December 2020, followed by Sh80.43 million profit in 2021.
However, the insurers subsequently slipped back to losses as normalcy resumed.
In terms of market share in the medical insurance business, Old Mutual General closed June last year accounting for 16.68 percent of the premiums, followed by Jubilee Health (15.36 percent), CIC General (12.42 percent), AAR (12.19 percent) and Britam General (7.28 percent).
Kenya’s medical insurers want to set up a single system that will allow them to share information on a real time basis in a bid to cut underwriting losses and enhance the sustainability of their businesses.
A previous study by the Association of Kenya Insurers (AKI) listed high cost of treatment, fraud, lack of rich data and price transparency, premium undercutting and high business administration costs as the key drivers to poor underwriting results in medical insurance.
In 2022, AKI said it was working on an integrated health information exchange and management system to enable medical underwriters and health service providers to share agreed information on a real time basis.
