NAIROBI, Kenya, Jan 9 – General insurers slashed their losses by 46.5 per cent to Sh2.26billion in the third quarter of 2022 down from a loss of Sh4.13 billion reported in Q3 2021, the latest industry data shows.
The drop in losses was driven by an increase in general insurance premiums and a slow growth in claims.
According to the Insurance Regulatory Authority(IRA) Q3 2022 report, general insurance premiums increased to Sh134.41 billion, a 10.7 per cent jump from Sh121.4 billion in Q3 2021.
On the other hand, the general insurance business underwriters incurred claims amounting to Sh56.85 billion during the period, a 10.8 per cent growth from Sh51.3billion in Q3 2021.
This saw the claims incurred loss ratio stand at 68.4 per cent in the quarter under review compared to 68.6 per cent in Q3 2021.
Incurred claims ratio (loss ratio) measures the claims incurred as a percentage of net earned premium income. The industry average loss ratio over the last four years is 66.4 per cent.
During the period, the high premium volume classes of general insurance business contributed the largest proportions of incurred claims with medical at 42 per cent, motor private 24.9 per cent and motor commercial 23 per cent.
“Motor classes of insurance business incurred claims contributed 47.9 per cent of total claims incurred compared to their business contribution of 29.4 per cent of the total premium under general insurance business,” IRA noted.
Meanwhile, the claims paid increased by 13.4 per cent to KES 53.25 billion compared to Sh 46.97 billion paid in Q3 2021.
Medical, motor private, and motor commercial had the highest amounts of paid claims at 44.5, 24.6 t and 21.5 per cent respectively of total industry paid claims under general insurance business.
The three classes jointly constituted 90.6 per cent of all claims paid by general insurers.
During the period under review, direct expenses amounted to Sh28.57 billion and this composed of Sh22.90 billion (80.2 per cent) in management expenses and Sh5.67 billion (19.8 per cent) in commissions
Direct expenses include commissions and underwriting management expenses. The items constituting underwriting management expenses include; staff welfare expenses, salaries, publicity and advertising, legal fees, and stationery amongst others.
