Insurance sector profits up despite tough times.
Insurance firms recorded significant growth during the fourth quarter of 2017, signalling tenacity in what most sectors have described as a tough economic environment.
Data from the Insurance Regulatory Authority shows underwriting profits in the general business category spiked to Sh556.18 million compared to a loss of Sh390.84 million a year before.
The good performance was driven by a marginal growth in both gross premium income and claims incurred which increased 2.49 and 2.16 per cent respectively. Gross premium income for the general business segment was Sh124.71 billion, while firms incurred claims worth Sh54.86 billion.
Insurers have over the years suffered huge losses as a result of high claims, coupled with increased management expenses in form of commissions for the acquisition of new business.
Commissions grew slightly by 1.5 per cent to Sh6.82 billion, while management expenses rose 6.46 per cent to Sh27.81 billion.
'The loss ratio under general insurance for the period under review was 60.9 per cent compared to 62.3 per cent in 2016,' IRA said in the quarterly report.
The net spending on commissions decreased marginally from Sh12.32 billion spent in commissions in 2016 to Sh12.18 billion in the period under review.
Insurance premium growth slowed down during the one-year period to December 2017 to 6.6 per cent compared to an annual growth of 12.3 per cent in a similar period of 2016.
'Insurance premium growth continues to be driven by the higher growth of 13.6 per cent in the long-term insurance business segment compared to a growth of only 2.5 per cent in the general insurance business segment,' the report stated.
Up to 60 per cent of the industry business comprises of general insurance premium. The proportion of long-term insurance is, however, increasing on the back of higher growth in long-term insurance premiums compared to general insurance business.
The report shows in the general insurance business, marine and transit registered the largest growth in premiums of 34.35 per cent to Sh2.8 billion.
Underwriters are working to increase their income through marine cargo insurance following the implementation of Section 20 of the Insurance Act requiring all imports to be insured locally. Marine cargo insurance business is estimated to bring in Sh2.2 trillion.