CIC hires managing director to revive ailing medical business

Mr Elijah Wachira. PHOTO | FILE
Mr Elijah Wachira. PHOTO | FILE 

CIC Group has hired an executive of rival insurer Gateway to head its general underwriting business, whose main brief will be to revive the firm’s ailing medical unit.

The NSE-listed insurer has hired Elijah Wachira, who served as Gateway’s acting CEO, as the managing director in charge of general insurance business.

His appointment follows the June exit of Kenneth Kimani after the insurer recorded losses in four general insurance lines including medical, private motor vehicle, liability and accidents.

Others who left CIC at the time included head of medical division doctor Edward Rukwaro and principal officer of CIC Uganda Milka Kinyua.

CIC — majority-owned by Kenya’s co-operative movement — said it is banking on Mr Wachira’s experience in the insurance industry to boost the fortunes of its short-term underwriting business, which accounted for 70 per cent of total gross underwritten premiums in 2014.

“The company anticipates to grow its general insurance business following his knowledge and expertise garnered over the years,” said CIC Group in a statement.

The company has also raided Chase Bank for Ezekiel Owuor, who will serve as managing director of CIC Life Assurance. He was general manager in charge of consumer business at the mid-tier lender.

Mr Wachira served for three years as general manager at AAR Health Services and later joined Madison Insurance in November 2010 in a similar capacity. He then moved to Gateway.

Pan Africa Insurance Holdings in March completed the acquisition of a 51 per cent stake in Gateway Insurance in a deal valued at Sh561 million.

CIC reported an underwriting loss of Sh556 million from its medical insurance unit last year, which cut the group’s net profit by nearly a fifth in the period to December 2014.

Kenya’s insurance industry recorded a medical underwriting loss of Sh437 million last year, down from a profit of Sh282 million in 2013, a report by the Insurance Regulatory Authority (IRA) shows.

Eleven out of the 20 companies offering medical insurance in Kenya recorded losses last year, according to the IRA report.

This was blamed on fraud and high healthcare costs, with some hospitals reviewing their prices twice last year.

CIC’s other underwriting losses were recorded in private motor vehicle (Sh62.2 million), liability (Sh35.2 million) and accidents (Sh4.2 million).

Net profit stood at Sh1.08 billion compared to Sh1.3 billion in the year 2013. The general business grew by a third to record Sh9.2 billion in gross premiums with life raking in Sh4.1 billion.

But claims spiked 43.5 per cent to hit Sh8.6 billion, wiping out all gains in growth of premiums and eating into earnings.

The performance forced CIC Insurance to hire consultancy firm Deloitte to advise on restructuring of the company and review its loss-making, medical cover business.

The company is also hoping to ride on new technology to reduce fraud.