One of the founders and key shareholders of the betting firm SportPesa, Ronald Karauri, has partnered with others to enter the general insurance business, focusing on public service vehicles (PSVs) that have resulted in losses for many insurers.
A letter seen by the Business Daily shows that the Insurance Regulatory Authority (IRA) licensed Definite Assurance Company Limited as the newest general underwriter in the Kenyan market on December 11, 2024, after the company raised Sh600 million in capital and applied for the license.
In the letter to Definite, IRA chief executive Godfrey Kiptum stated that the license was granted for all classes of general insurance, which means the insurer will be free to cover other short-term risks, including medical, fire, aviation, and home insurance.
"I refer to your application for the licensing of Definite Assurance Company Limited. Your application has been processed, and Definite Assurance Company Limited has been found to comply with the licensing requirements," said Mr Kiptum in the letter addressed to the insurer's chief executive.
Definite shareholders will hope the new insurer abandons the PSV insurance playbook, given that motor vehicle insurance has been a loss-making industry over the years.
Directline Assurance, the market leader in motor PSV insurance, is caught up in a shareholder dispute, while other major insurers—Xplico and Invesco—have fallen into statutory management mainly due to unpaid claims.
An official search of the Registrar of Companies records revealed that Definite's shareholders include Ronald Kamwiko Karauri, one of the SportPesa founders and shareholders. Karauri is also the Member of Parliament for the Kasarani constituency.
Mr Karauri holds 600 ordinary shares in Definite, representing a 10 percent stake in the company. The shareholders raised Sh600 million as the nominal share capital for the company, which comprises 6,000 ordinary shares valued at Sh100,000 each. Mr Karauri did not respond to our calls or text messages.
Definite Assurance's top shareholders are Mikaj Topgrains Company Limited (25 percent), Convenient Digicash Limited (25 percent), and Swingers Skypark Lounge Ltd (22 percent).
Other owners include Lydra Ventuers Limited (five percent), Jekelusahe Limited (five percent), Monday Maxine Kerubo Oyugi (three percent), Cecily Muthoni Wairimu (three percent), and Patrick Ndirangu Kibuthu (two percent). The ownership details of the institutional investors were not immediately clear.
Definite Assurance Company Limited has since appointed Hezron Wambugu as its CEO after recruiting him from Kenya Orient Insurance Limited. Mr Wambugu has been in the insurance sector for decades, having held senior positions at UAP Insurance and Madison Insurance.
Definite's focus on motor commercial PSV insurance, which addresses injuries and fatalities from public transport vehicles, arises from the various challenges faced by key insurers in this sector.
Directline Assurance, which is involved in a shareholder dispute, is the market leader in motor commercial PSV insurance, having recorded Sh3.4 billion in gross premiums in 2023 from this class of insurance, which gives it a 61.56 percent market share.
It was followed at a distance by Africa Merchant Assurance (14.95 percent), Invesco (8.15 percent), Pioneer (6.71 percent), and GA insurance (six percent).
Directline's shareholding may have increased further after Invesco was placed under statutory management last year, which prevented it from continuing to underwrite any class of insurance. The exit of Invesco has left the market with only nine insurers underwriting commercial buses and matatus (vans).
Another PSV insurer, Xplico Assurance, entered statutory management in December 2023 after defaulting on claims payments.
Motor vehicle insurance has been problematic for many insurers over the years, with players posting underwriting losses.
IRA data shows insurers posted a Sh5.92 billion underwriting loss from motor vehicle covers in the financial year ended December 2023.
This was a 22 percent cut from the Sh7.59 billion loss in the previous year, but it continued a streak of losses.
Many insurers have aggressively revised premiums upwards to reflect the market's level of risk and have also dropped comprehensive coverage for some vehicle models deemed too risky. Insurers have also adopted telematics—in-car monitoring devices—to adjust premium rates based on policyholders' mileage and driving habits.
Others, such as Directline, have been insisting on cashless fare payments to ascertain whether individuals making third-party claims were indeed in the vehicles for which they are seeking compensation for accidents.
The adoption of cashless fare payment has been increasing since the Covid-19 pandemic, with mobile money platforms at the forefront.
This marks an improvement over the past when a previous cashless fare payment platform initiated by the government and launched in November 2014 failed due to strong opposition from matatu operators, who believed it was a tactic to monitor their daily earnings for taxation purposes.
