Maturing policies cut insurance companies’ earnings creating a Sh2.9 billion underwriting loss in the last quarter of 2019, up from a loss of Sh1.6 billion in 2018.
Insurance Regulatory Authority’s (IRA) latest report says the underwriters paid Sh54 billion in long-term benefits, up from Sh45.2 billion last year representing a 19.4 per cent jump.
Claims in general business rose by Sh824 million while commissions were up Sh149 million, as management expenses increased from Sh42.6 billion to Sh44.9 billion.
“General Insurance business underwriting (which contributes 57.3 percent of the industry most of which is motor) saw an 80 per cent increase in underwriting loss to Sh2.97 billion,” IRA said in the quarterly report.
The rise in expenses came amid a 5.8 percent growth in gross premiums from Sh216.3 billion to Sh228.8 billion.
Overall, insurance companies sought money outside their main business in stocks, government debt and real estate which lifted the industry back to profitability.
The boost from investment income saw companies post Sh8.9 billion net profits last year up from Sh6.8 billion in 2018, a 30.7 percent jump.
“Investment income (from long-term investments) increased significantly by 60.6 percent to Sh46.58 billion as at end of Q4 2019 (Q4 2018: Sh29.00 billion) which was mainly from government securities,” IRA said.
Total investments under general insurance business as at the end of Q4 2019 amounted to Sh125.95 billion, indicating an increase of 2.4 per cent from Sh123.01 billion reported in Q4 2018.
“Kenya government securities (treasury bills and bonds) and investment property accounted for highest proportions of total general insurers’ investments at 46.5 per cent and 21.4 per cent respectively,” IRA said.
Long-term business had collected Sh97.8 billion in premiums by the end of last year while general insurance premiums stood at Sh131.13 billion.
Fraud continued to plague the industry with most of the theft being done by brokers and agents.
IRA said 30 cases were reported to the Insurance Fraud Investigation Unit (IFIU) with 16 in October, 3 in November and 11 in December.