Reduced political risk spurs growth and boosts insurance

Reduced political risks following a peaceful election and transition in Kenya is expected to spur growth of insurance industry in the country, according to an advisory body.
The Kenya Association of Insurers (AKI) said late Thursday that plans to launch East African Community (EAC)’s Common Market, which point to a solid economic future for the region in the medium to long term will also augur well for the industry.
"The sector will also be tapping into opportunities provided by recent discoveries of oil and gas across the East African region to widen their market share and increase profitability," AKI chairman Justus Mutiga said during the launch of the report for 2013 in Nairobi.
Mutiga said the overall insurance penetration is still low, although it increased to 3.44 percent in 2013 compared to 3.16 percent 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," he told journalists.
He said 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.
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.
The insurance industry currently comprises 48 insurance companies, 187 licensed insurance brokers, 29 medical insurance providers (MIPs) and 4,628 insurance agents.
Other licensed players include 134 investigators, 105 motor assessors, 22 loss adjusters and 27 insurance surveyors.
According to the report, motor insurance accounted for 39 percent of total gross premiums or 387 million U.S. dollars, including commercial and private, while medical class recorded a 24 percent or 236 million dollars of the total premiums.
It showed the industry incurred net claims totaling about 720 million dollars in 2013 compared to 636 million dollars in 2012, representing an increase of 13.1 percent.

"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 industry made a pre-tax profit of 205 million dollars in 2013 up from 170 million dollars in 2012 as insurers stepped up efforts to increase penetration of their products and services among Kenyans.

Source: Xinhua