The insurance industry made a pre-tax profit of Ksh. 18 billion in 2013 up from Ksh. 15 billion in 2012 as insurers stepped up efforts to increase penetration of their products and services among Kenyans. This is according to the Annual Insurance Industry Report 2013.
During the launch of the report, now in its 10th edition, Association of Kenya Insurers (AKI) Chairman, Mr. Justus Mutiga, said the overall insurance penetration is still low, although it increased to 3.44% in 2013 compared to 3.16% in 2012.
“The low penetration highlights the significant opportunities that exist in the Kenyan Insurance market especially in commercial lines such as oil, real estate and infrastructure,” said Mutiga.
The industry is reaching out to low income earners through micro-insurance products and diversifying distribution methods to further increase the penetration and grow gross written premiums.
“Micro insurance and bancassurance are still in the early stage of development and they will be key drivers of both premium growth and penetration,” he said.
Mr. Mutiga said the National Social Security Fund (NSSF) Act 2013, which allows employees to opt out of NSSF scheme means that pension business will grow and the insurance industry could be a beneficiary.
Insurers will also be looking up to opportunities provided by recent discovery of Oil and Gas across the East African region to widen their market share and increase profitability of the industry.
The report shows the industry recorded gross written premium of Ksh 130.65 billion in 2013 compared to Ksh 108.54 billion in 2012, representing an increase of 20.40%.
Overall, gross earned premium increased by 16.36% to stand at Kshs. 107.18 billion in 2013 compared to Kshs. 92.11 billion in 2012.
Non-Life Insurance segment also referred to as general insurance recorded gross premium worth Ksh. 86.64 billion compared to Kshs. 71.46 billion in 2012, representing 21.1% growth.
In 2013, medical insurance recorded the highest growth in gross premiums of 59.3% to Ksh. 21 billion up from Ksh. 13 billion in 2012. The growth of the medical class was exceptionally high as results for two newly licensed medical insurance underwriters were not included in 2012.
Life Insurance on the other hand recorded a premium income of Ksh. 44.01 billion in 2013 compared to Ksh. 37.08 billion in 2012, representing a growth of 18.7%.
The report is based on information obtained from the audited annual financial statements as published by and received from member companies of AKI.
It shows the industry incurred net claims totaling Ksh. 63.35 billion in 2013 compared to Ksh. 56.03 billion in 2012, representing an increase of 13.1%.
“This increase (in net claims) is a clear manifestation of the commitment of the industry towards restoring the economic status of clients in the event of loss as a result of insured risks,” said Mutiga.
The report paints a brighter future for the insurance industry due to reduced political risk following a peaceful election and transition in Kenya and plans to launch a Common Market, which point to a solid economic future for the region in the medium to long term.
The Kenyan insurance industry currently comprises 48 insurance companies, 187 licensed insurance brokers, 29 medical insurance providers (MIPs) and 4628 insurance agents. Other licensed players include 134 investigators, 105 motor assessors, 22 loss adjusters and 27 insurance surveyors.
AUTHOR:BEN GUMO AND SOURCES