Profits of underwriters hit by a Sh28bn surge in claims

The industry's total number of claims and claims outstanding rose by Sh27.5 billion from Sh267.3 billion in the six months ending June 2024 to Sh294.9 billion, according to IRA data.

Total claims refers to the aggregate sum of all money an insurance company pays out to its policyholders as compensation for losses or damages covered under their policies, over a specific period.

Major insurance firms that have disclosed their earnings for the period ended June 2025 have revealed falling profits from an underperformance of their underwriting business.

Liberty Kenya Holdings Plc posted a 58.9 percent drop in its net profit to Sh260 million from Sh632 million as its insurance result marked a reduced Sh225 million profit from Sh577 million previously.

“There was an increase in the volume of motor and medical claims in the general business, which has negatively impacted our overall net insurance results and earnings,” Liberty said.

Two other major underwriters, Sanlam Kenya Plc and Old Mutual Holdings Plc, booked underwriting losses in the six months as the insurance business was pinned down by rising claims.

Sanlam’s net insurance service result closed at a loss of Sh10.1 million from a profit of Sh86.1 million, while Old Mutual’s underwriting loss widened to Sh303 million from a loss of Sh246 million previously, even as it faced lower claims with falling revenues from premiums.

The two underwriters marked a significant drop in profit to Sh30.9 million from Sh282.2 million for Sanlam, while the latter’s profit dropped to Sh5 million from Sh249 million previously.

CIC Insurance Group Plc, meanwhile, saw its net profit narrow to Sh638.4 million from Sh709.9 million previously as its net insurance service result marked a drop from Sh1.04 billion in June 2024 to Sh128.2 million in the six months ended June.

Old Mutual has attributed the rising claims to complexities in the medical business, which includes interlocking intermediaries and a rising cost of medical imports that are mostly denominated in foreign currency.

The escalation in motor claims is meanwhile tied to worse driving patterns for the period.

“We are very dependent on third parties to reach customers in our medical business. When you look at medical costs, there is a huge component that has to do with foreign exchange. You find a mismatch where we price insurance in local currency, but the expenses are in foreign currency,” said Old Mutual Holdings Plc chief executive officer Arthur Oginga.

“Motor is also complicated. You know how Kenyans drive. Motor and medical have very thin margins, so you make or break it during the underwriting process.”

According to IRA data, total liability claims rose from Sh75.2 billion in six months to Sh79 billion.

Non-liability claims, meanwhile, rose from Sh127.3 billion to Sh132 billion while claims related to the life business jumped to Sh83.5 billion from Sh64.8 billion.

Insurance firms paid out Sh114.7 billion in claims for the first six months of the year, including Sh10.7 billion for liability claims, Sh43.3 billion for non-liability claims, Sh60.5 billion for life claims, and Sh121 million for microinsurance.

The paid claims contrast to Sh89 billion at the same time last year, which covered Sh9.3 billion liability settlements, Sh35.9 billion in non-liability claims, and Sh43.8 billion in life claims.

Old Mutual says it has sought innovative interventions to curb motor and medical claims, including leveraging data and forming partnerships with medical service providers to lower health costs.

“We maintain underwriting discipline by actively monitoring internal and external data. You assess the model of a car, age of the vehicle, value, and where the vehicle mostly resides,” added Mr. Oginga.

“For medical, we don’t have control over the entire value chain, hence our exploration of partnerships with pharmacies and other medical providers to control cost growth.”

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