Home Business amount Higher claims, general insurers with low investment cost Sh1.49bn

Higher claims, general insurers with low investment cost Sh1.49bn

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Higher claims, general insurers with low investment cost Sh1.49bn


Medical and car insurance consistently emerged as the leading causes of claims in the industry. FILE PHOTO | NMG

General insurers recorded an underwriting loss of 1.49 billion shillings in the second quarter that ended in June, attributed to higher claims and lower investment income.

The loss widened from 1.46 billion shillings a year earlier, according to the latest report from the Insurance Regulatory Authority (IRA).

“General insurance business underwriting performance was a loss of 1.49 billion shillings, down from a loss of 1.46 billion shillings in the second quarter of 2021,” said the sector regulator.

“The workers’ compensation class had the highest underwriting profit of 1.45 billion shillings while the private motor and medical classes of the general insurance business suffered the highest underwriting losses of 2.44 billion shillings and 869.41 million shillings respectively.”

Medical and motor insurance have consistently emerged as the top causes of losses in the industry, a finding attributed to a combination of factors including fraud and price undercutting.

Gross premiums in the general insurance business rose 8.2% to Sh92.3 billion in the reporting period from Sh85.3 billion a year earlier.

Claims jumped 14.5% to 37 billion shillings while investment income fell 26.5% to 4.6 billion shillings.

The loss ratio in the general insurance sector worsened to 68.1% from 66.8%. The loss rate refers to the benefits paid to policyholders as a percentage of the premiums collected.

Along with higher claims and reduced investment income, general underwriters also suffered from an increase in direct expenses which jumped 7.4% to 18.8 billion shillings.

Insurers are among the institutional investors who have suffered losses on paper following the decline in share prices of listed companies.

Rising interest rates on new government bonds also reduce the value of fixed income securities that were previously issued at lower rates.

Insurers accelerated their exit from the stock market to reduce the impact of stock price fluctuations on their results and the value of their assets.

Policyholders, including those offering life cover, reduced their holdings of listed stocks to a new low of 2.8% of their portfolio in June, according to IRA data.

The companies held 25.26 billion shillings worth of listed shares in June this year, down 23.8% from a year earlier when assets were valued at 33.16 billion shillings .

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