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Unpacking The Kenyan Insurance Sector In Q2 – Soko Directory Team

Investment income in the insurance sector declined by 37.0% to Kshs 16.6 bn in Q2’2022, from Kshs 26.3 bn recorded in Q2’2021 for long-term insurance businesses, and also declined by 26.5% for general insurance businesses to Kshs 4.6 bn, from Kshs 6.3 bn recorded in Q2’2021.
The declines are attributed to fair value losses on quoted equity investments in the capital market as evidenced by the declines in the NASI, NSE 25, and NSE 20 which posted losses of 25.2%, 21.0%, and 15.2%, respectively, at the end of Q2’2022.
The net claims for the long-term insurance business increased by 4.7% to Kshs 41.3 bn, from Kshs 39.4 bn in Q2’2021, mainly driven by requests from individuals wishing to access their pension benefits given the reduction in their disposable income.
On the other hand, net premium income for the long-term business grew by 8.2% to Kshs 64.3 bn in Q2’2022, from Kshs 54.7 bn in Q2’2021.
Net claims for the general business increased by 14.5% to Kshs 37.0 bn, from Kshs 32.4 bn in Q2’2022, driven by a 44.4% growth in medical claims to Kshs 15.5 bn in Q2’2022, from Kshs 12.0 bn in Q2’2022. Contrastingly, net premiums increased by 12.3% to Kshs 54.4 bn, from Kshs 48.5 bn in Q2’2021.
The loss ratio for the long-term business declined by 8.0% points to 64.2%, from 72.2% recorded in Q2’2021 on the back of a 17.8% increase in net premiums relative to a 4.7% increase in net claims in Q2’2022.
Notably, the loss ratio for the general insurance businesses increased to 68.1% in Q2’2022, from 66.8% in Q2’2021 owing to a 14.5% growth in claims incurred that outpaced the 12.3% growth in the net earned premium income,
The combined ratio for general insurance business declined by 4.7% points to 102.7% in Q2’2022, from 107.4% recorded in Q2’2021 but 0.8% points higher than the 101.9% recorded in Q1’2022.
The increase in the combined ratio was mainly attributable to the increase in claims ratio, having increased by 1.3% points to 68.1% in Q2’2022, from 66.8% in Q1’2021, coupled with a 0.5% points increase in commissions expense ratio to 7.0%, from 6.5% in Q2’2021.
General insurance businesses recorded an underwriting loss of Kshs 1.49 bn in Q2’2022 a 2.1% decline from Kshs 1.46 bn recorded in Q2’2021.
The decline in underwriting performance was driven by a 14.5% increase in net claims incurred to Kshs 37.0 bn, from Kshs 32.4 bn in Q2’2021 against a relatively lower 12.3% increase in net premiums earned to Kshs 54.4 bn, from Kshs 48.5bn recorded in Q2’2021.
Key to note, the workmen’s compensation class made the highest underwriting profit of Kshs 1.5 bn during the quarter while motor private and medical classes of general insurance business incurred the highest losses of Kshs 2.4 bn and Kshs 0.9 bn respectively.
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.