Economy

Directline gains after PSVs ditch Xplico Insurance

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Public Service Vehicles ready for passengers at Tea Room Stage, Accra Road, Nairobi on Monday, December 21, 2020. PHOTO | DENNIS ONSONGO | NMG

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Summary

  • Latest Insurance Regulatory Authority (IRA) data shows premiums paid to the insurer declined from Sh566 million to Sh243 million, making Xplico the biggest loser in the sector during the third quarter.
  • Other insurance companies that lost market share include Kenya Orient, Resolution, Heritage and Fidelity.
  • Directline controls the matatu industry insurance with a collection of Sh2.2 billion in premiums followed by Sanlam with Sh301 million and GA insurance at Sh240 million.

Matatu owners ditched Xplico Insurance shrinking its market share of the public service vehicle industry by almost two-thirds from 21.9 percent to 7.5 percent by September last year.

Latest Insurance Regulatory Authority (IRA) data shows premiums paid to the insurer declined from Sh566 million to Sh243 million, making Xplico the biggest loser in the sector during the third quarter.

Other insurance companies that lost market share include Kenya Orient, Resolution, Heritage and Fidelity.

The biggest gainer of the slump at Xplico was Directline insurance, which now controls 69.6 percent of the market and Sanlam insurance whose market share jumped from 3.7 percent to 9.3 percent.

Directline controls the matatu industry insurance with a collection of Sh2.2 billion in premiums followed by Sanlam with Sh301 million and GA insurance at Sh240 million.

The company was also among the top five firms that received the most complaints from customers according to the IRA an indicator of customer dissatisfaction.

The regulator received 31 complaints each from Africa Merchant customers, Monarch insurance and Resolution, 29 complaints at Xplico Insurance and 28 complaints at Kenya Orient.

The regulator receives customer complaints through various channels which include post, email, telephone calls via the IRA toll-free lines, walk-ins and social media such as Twitter and Facebook.

“The authority registered 467 complaints in Q3 2021. General insurance business accounted for 80.3 percent of the complaints whereas 19.7 percent were made against long-term insurers,” said IRA CEO Godfrey Kiptum.

The matatu sector has recovered to the pre-Covid-19 era after industrywide premiums rose to Sh3.2 billion in the nine months to September.

Premiums had slumped from Sh3.4 billion in 2019 to Sh2.5 billion in 2020 at the height of the pandemic after the government imposed restrictions on movement including night curfew, curbs into Nairobi, Mombasa and Mandera leading to the grounding of some matatu operations.

The government also imposed capacity limits on public service vehicles that also pushed out some players in the sector.

Lifting of the curfew has seen matatus troops back onto the roads and buying the mandatory insurance that has lifted the sector.

Although considered high risk the sector seems to have managed to contain claims in 2021 as payments to beneficiaries reduced from Sh1.7 billion to Sh1.2 billion making the business profitable.

Public Service insurance providers made a Sh257 million profit, a breakaway from the rest of the motor vehicle insurance industry which reported underwriting losses.

Private Motor vehicle insurers made a Sh4.8 billion loss while motor commercial made a Sh2.7 billion loss.

The regulator said the losses were as a result of an increase in claims as accident cases rose following the lifting of curfews and restriction of movements.

“This was mainly attributed to high increase in loss ratios in motor private and motor commercial classes of insurance business due to relaxation of restrictions that had been imposed on travel due to Covid-19 pandemic,” Mr Kiptum said.

Restriction of movement, lockdowns and night curfew in 2020 saw a reduction in motor claims from Sh23.4 billion in 2019 to Sh22.1 billion.

The claims have jumped back to Sh26.8 billion following relaxation of Covid-19 restrictions on movement.

Insurance companies faced a higher increase in personal motor vehicle claims which increased from Sh11.5 billion to Sh14.9 billion.

Motor Commercial jumped from Sh10.6 billion to Sh11.8 billion.

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