Insurers Record Sh6.34 Billion Underwriting Loss on Reopening of the Economy

General insurers posted the greatest underwriting loss in the decade during the fourth quarter of 2021 as they almost doubled losses from insuring commercial and private vehicles.

According to Insurance Regulatory Authority (IRA), the underwriting losses which are the difference between premiums collected and claims plus expenses paid grew almost fivefold to Sh6.34 billion in Q4 2021 from a loss of Sh1.18 billion reported in Q4 2020.

The increase in the losses was mainly attributed to an increase in underwriting losses in motor private and motor commercial classes of insurance business due to the relaxation of restrictions that had been imposed on travel due to the Covid-19 pandemic in 2020.

Covid-19 restrictions such as curfews and lockdowns in 2020 and a period of 2021 had cut travel activities.

The latest data from IRA shows that private motor vehicles made an underwriting loss of Sh6.17 billion while commercial motor vehicles made an underwriting loss of Sh3.32 billion.

Despite the huge underwriting losses, the industry recorded an after-tax profit of Sh8.65 billion by end of Q4 2021, a 0.4 per cent decrease from Sh8.69 billion reported by end of Q4 2020.

Insurance premiums in the quarter under review also grew by 18.5 per cent to hit Sh276.06 billion up from Sh232.95 billion recorded in the same period in 2020.

"The growth is attributed to economic recovery from the effect of Covid-19 which negatively impacted the growth of insurance businesses in 2020," said IRA.

Long term insurance business premiums amounted to Sh123.71 billion accounting for 44.8 percent of the total industry premium while general business premiums amounted to Sh152.35 billion (55.2 per cent).

Life Assurance gross premium income went up by 15.3 per cent from Sh29.57 billion reported in Q4 2020 to Sh34.11 billion reported in Q4 2021.

The growth was largely contributed by GA Life Assurance, ABSA Life Assurance, Britam Assurance, and Kenindia Assurance Company limited whose life assurance business increased substantially during the year 2021.