Insurance industry Q4 underwriting losses surge to Kshs. 6.3B

Underwriting losses in the general insurance business widened by more than four times to Kshs. 6.3 billion during the last three months of 2021 dragged by huge losses recorded in motor insurance.

Data from the Insurance Regulatory Authority indicates that the motor private and motor commercial classes of insurance business recorded losses totalling Kshs. 9.5 billion. However, the losses were offset by Workmen’s Compensation class of business that posted a profit of Kshs. 2.8 billion.

The latest data from Insurance Regulatory Authority, IRA shows that the industry’s underwriting loss widened more than four times from Kshs. 1.18 billion reported in Quarter four of 2020 to Kshs. 6.34 billion during a similar period in 2021.

“The increase in underwriting losses is mainly attributed to an increase in underwriting losses in motor private and motor commercial classes of insurance business due to relaxation of restrictions that had been imposed on travel due to the COVID-19 pandemic in 2020,” said IRA.

Motor private made an underwriting loss of Kshs. 6.17 billion while motor commercial made an underwriting loss of Kshs. 3.32 billion.

IRA says the industry could have made an underwriting profit of Kshs. 3.15 billion if the motor business was to be excluded.

However, excluding the motor business would lead to a decline of 31% of the overall general insurance business. The insurers reported claims incurred amounting to KES 70.14 billion during the period.

This was an increase of 22.3% from Kshs. 57.36 billion reported in the fourth quarter of 2020. The claims paid increased by 18.1% to Kshs. 64 billion compared to Kshs. 54.19 billion paid in Q4 2020.

Medical, motor private and motor commercial had the highest amounts of paid claims at 41.7%, 26.2% and 21.0% respectively of total industry paid claims under the general insurance business. The data shows that insurance premiums grew 18.5% to Sh276.06 billion.

The Insurance Regulatory Authority (IRA) has been pushing for a review the current premium rates which will increase the cost of insuring private and commercial vehicles.