Insurance rides on premiums to record Sh415b in earnings
Steve Umidha @UmidhaSteve
Life insurance business total assets recorded a 15.2 per cent increase to Sh451.9 billion last year with liabilities growing by 13.9 per cent to Sh399.7 billion in the same period, according to statistics by the Economic Survey 2020 released yesterday.
Gross premium income and net premium income for the life insurance category grew by 11.7 per cent and 12.7 per cent respectively in 2019 while reinsurance life insurance recorded slower growth in gross premium income, total assets and total liabilities of 16.5, 9.9 and 8.4 per cent respectively during the same period.
Also Read:
General insurance’s total assets increased by 2.4 per cent to Sh190.1 billion in 2019, while total liabilities increased by 2.8 per cent to Sh116.8 billion in the same period.
Investments, gross premium income and claims incurred from general insurance recorded decelerated growths of 2.2, 1.5 and 1.2 per cent respectively in 2019.
Net commissions
However, commissions paid declined by 7.9 per cent to Sh6.1 billion while management expenses declined marginally to Sh 30 billion in the review period.
Reinsurance general business assets grew by 11.7 per cent in 2019 compared to an increase of 6.3 per cent in 2018. Shareholders’ funds grew by 6.2 per cent to Sh 31.2 billion in 2019 while management expenses increased significantly by 60.3 per cent to Sh3.4 billion in the same period.
Pension fund assets rose to Sh1.3 trillion as at December 2019 from Sh 1.2 trillion as at December a year earlier. Most assets were held in government securities, immovable assets and quoted equities which accounted for 42.5, 18 and 17.7 per cent of the total assets respectively last year.
But more profound was the admission by Association of Kenya Insurance (AKI) chief executive Tom Gichuhi last year that the industry was reeling from immense losses due to tenacious price undercutting practices among insurers – an increasing comportment he feels is self-inflicted and one that he experts should discontinue debating using the hoary old line about there being an epidemic of dodgy whiplash related claims.
“The industry must act,” he said in a previous interview with Business Hub.
AKI found a number of areas of industry breach on general insurance pricing, including rule breaking by a number of firms when it comes to policy renewals – a disturbing pattern – and one that is likely to further erode insurance business.
