BY ANTONY MUTUNGA
I
nsurers recorded a positive change at the end of 2022 as they managed to trim losses in the final quarter of the 2022 as compared to same period in 2021.
According to the Insurance Regulatory Authority (IRA), general insurance business underwriting results improved to post a loss of Sh3.72 billion in the fourth quarter (Q4) of 2022 as compared to Sh6.34 billion posted in Q4 2021.
The data from the regulatory authority shows that the workmen’s compensation class made the highest underwriting profit, posting Sh2.62 billion in Q4 2022 while motor vehicle private class posted the highest loss in the quarter standing at Sh4.04 billion. Despite this, the class managed to improve by 34% as compared to Q4 2021 where it posted a loss of Sh6.17 billion.
The most improved class in Q4 2022 was the marine and transit class which returned a profit of Sh545.1 million in the fourth quarter of 2022 from a loss of Sh99.3 million in the same period in 2021. On the other hand, the medical business class saw the profit it posted in the period in 2021, Sh80.43 million shift to loss of Sh726.94 million in Q4 2022.
In the period under review, general insurance premiums were up by 10.9% during the period standing at Sh168.9 billion from Sh152.4 billion in the same period in 2021. According to the data, medical and motor insurance classes maintained a leading position in terms of contribution in general insurance business premium at 32.5% and 31.9% respectively while personal accident and miscellaneous classes are the only classes whose premiums decreased by 2.5% and 12.4% respectively.
Long term insurance business premiums grew by 13.8 per cent to Sh140.84 billion compared to Sh123.71 billion in 2021. Deposit Administration and Life Assurance classes remained the biggest contributors to the long-term insurance business accounting for 35.9 and 25.2 per cent respectively.
In terms of general insurance incurred claims, general insurers were able to record an increase of 10.7% from Sh70.14 billion reported in the fourth quarter of 2021 to Sh77.64 billion in the same period in 2022. The high premium volume of classes of general business were responsible for huge share of the incurred claims. For instance, the medical class alone contributed 41.9% while the motor class of insurance business contributed 48.2% – whereby motor private stood at 24.8% and motor commercial (23.4%). The rest of 31.9% was contribution from the rest of the business classes.
The general insurance incurred loss ratio which measures the net claims incurred as a percentage of net earned premium income, managed to reduce to 67.9% in 2022 as compared to 68.8% in 2021. In the last four years, the average has stood at 66%. The claims paid in period under review increased by 12.9% to Sh72.26 billion compared to Sh64.01 billion paid in Q4 2021. Medical, motor private and motor commercial had the highest amounts of paid claims at 43.5%, 24.9% and 21.9% respectively of total industry paid claims under general insurance business amounting to the lion share of 90.3% of all claims paid.
Direct expenses which include commissions and underwriting management expenses, such as salaries, publicity and advertising, legal fees and stationery, amounted to Sh40.39 billion in Q4 2022 whereby Sh32.29 billion (79.9%) went to management expenses while Sh8.10 billion (20.1%) went to commissions.
When it comes to investments, total investments under general insurance business as at end of Q4 2022 stood at Sh156.32 billion, an 8.6% increase from Sh143.88 billion reported in Q4 2021. Kenya government securities (treasury bills and bonds) and investment property accounted for highest proportions of total general insurers’ investments at 58.4% and 16.3% respectively while loan and mortgages as well as other securities had the least proportions, 1.6% and 0.6% respectively.
Old Mutual General Insurance continues to come ahead as the general insurance market leader in terms of gross premium income with a share of 8.8%, followed by APA Insurance (8.7%), GA insurance (8.2%), CIC Insurance (8.2%), Britam (6.4) and Jubilee Health Insurance (5.8%). On the other hand, in terms of long-term insurance market share by gross premium income, Britam life assurance comes out on top with a share of 20.2% as at Q4 2022 followed by ICEA Lion life assurance (14.7%), Jubilee insurance (12.7%), Kenindia assurance (6.3%), CIC life assurance (5.5%) and Sanlam life assurance (5.3%).
