AAR Insurance net profit for 2016 fell 23.4 per cent weighed down by rising claims and higher operating costs.
The insurer’s net earnings dipped to Sh218 million last year from Sh285 million in 2015. Net claims went up 13.6 per cent to Sh2.79 billion in 2016 from Sh2.45 billion the previous year.
AAR managing director Caroline Munene said a tough operating environment characterised by increased cost of healthcare eroded the underwriter’s profit.
“Several factors are driving up health costs in the country including inefficiencies, over-servicing those with insurance, inflated consultancy, diagnostic and procedure fees. These among other factors have led to increase in claim ratios and thus declining revenues for insurers,” she said.