By Lola Okulo
MEDICAL insurance has for the first time made a profit, as motor private insurance registered a whooping 608.7 per cent rise in losses to Sh693.8 million. It was the only class of insurance that recorded a loss last year.
According to the Insurance Regulatory Authority's 2013 report released yesterday, underwriting loss for mo- tor private insurance was seven times more than in 2012 when it recorded a loss of Sh97.92 million.
Association of Kenya Insurers figures based on audited results of its members however captures a loss of Sh746 million for motor private. This is despite the introduction of the 'no-claims' discount and standardisation of premium rates meant to reward accident-free drivers and stop price undercutting in the motor class, which players blame for the huge losses.
"Many did not embrace the no-claims discount rule in 2013 but from May 1, 2014 enforcement is at top level and therefore we expect that the performance of motor business will improve," said AKI executive director Tom Gichuhi.
The report shows general insurance made a Sh3.4 billion profit last year, a 9.5 per cent increase from 2012 when it made Sh3.1 billion despite the massive losses recorded by motor private.
The motor private class has persistently recorded losses since 2009 except in 2011 when it returned a profit of Sh278.95 million. Medical insurance, also a serial loss maker, turned around last year to post a Sh282.5 million profit from a loss of Sh277.2 million in 2012.
AKI attributed this to better claims management through increased vigilance which has seen some insurers employ doctors to peruse invoices to detect any overcharge or unnecessary medical procedures and an increase health insurance coverage.
"General insurance underwriting profits rallied to an all-time high of Thursday, August 7, 2014 Sh3.4 billion. This is despite the underwriting losses from motor private class. However, the high premium medical class registered a profit for the first time," said IRA chief executive Sammy Makove.
In contrast to motor private, the motor commercial insurance class made a profit of Sh1.4 billion, the highest out of all the 13 categories of business in the local industry.
Claims incurred by the industry in general insurance business rose 16 per cent to Sh34.2 billion from Sh29.5 billion previously. Both motor classes accounted for 52.8 per cent of the claims taking up Sh18.05 billion while 27.1 per cent of the claims was attributed to medical class with Sh9.26 billion.
Aviation insurance had registered the highest loss ration in the period under review at 183.3 per cent compared to 16.8 per cent it recorded in 2012. This ratio is calculated as a percentage of the income from premiums over total claims.
Source: allAfrica
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