Insurance sector net profit rose by 138 per cent to Sh5.7 billion in the second quarter of 2019 from Sh2.3 billion in a similar period last year.
Insurance Regulatory Authority data shows that the sector was able to narrow its underwriting losses – the main business of insurance— to Sh1.2 billion from Sh2.6 billion in a similar period last year. The improved profitability was helped by a fall in claims from Sh27.7 billion to Sh27.2 billion, while premiums went up by Sh5 billion or four percent to Sh117 billion.
Investment income has remained a major source of insurance profits with long term business investment standing at Sh382.97 billion in June, an increase of 13.3 per cent compared to Sh338.15 as at end of Q2 2018. Most of it is parked in government securities.
“Kenya government securities (treasury bills and bonds) maintained their attractiveness to long term insurers comprising 67.3 per cent (Sh257.56 billion) of the total long term insurers’ investments,” IRA said.
General insurance business underwriting results improved significantly by 52.8per cent at the end of Q2, 2019 to record an underwriting loss of Sh1.26 billion. Long term insurance and general insurance segments grew by 6.9 per cent and 2.9 per cent respectively.
Fraud however continued to prove a great problem especially motor vehicles claims, theft by agents and medical fraud.
For the first six months of the year IRA has reported 60 cases of fraud with June (13) and February (12) being the months most hit.
There were seven cases in January, 11 cases in March, 7 cases in April and 10 cases in May.
“During Q2 2019, 30 fraud cases were reported to the Insurance Fraud Investigation Unit (IFIU).
Twenty-seven cases were pending investigation, two cases were pending before court and one case had been finalised,” IRA said.