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The insurance industry performance slowed in 2018 to record 3% growth compared to 6.5% in 2017. This is according to the Association of Kenya Insurers consolidated industry report for the year ending 31 December 2018.
“The industry braved a tough business environment in 2018 to post positive results. We are however upbeat about 2019 performance”, said Mr. Tom Gichuhi, AKI Executive Director, during the launch of the report.
The industry gross written premium grew to Ksh216.11 billion in 2018 from Ksh209.70 billion in 2017. Overall insurance penetration dropped to 2.43% in 2018 from 2.71 in 2017.
Non-Life (General) insurance accounted for 59.62% of the total premium, while life insurance accounted for 40.38%. Over the last five years (2014-2018), life insurance has grown by 53.45%, while non-life has grown by 28.54% during the same period.

“With the continued steady growth of life insurance, it is likely that in a few year’s life insurance will account for a bigger share of the gross written premiums. This will mirror the developed market trend where life insurance business has a bigger market share than non-life insurance,” noted Mr. Gichuhi.

Gross written premium for life insurance grew to Ksh87.26 billion from Ksh83.65 billion in 2017. Deposit administration (Pension) had the largest share at 38.12% followed by ordinary life at 30.49%. Group Life and Investment/Unit linked classes had 26.55% and 4.84% respectively.

Non-Life business gross written premium grew to Ksh128.85 billion from Ksh126.05 billion in 2017. Aviation insurance had the highest growth in 2018 at 19.29% followed by WIBA at 8.46%. Motor and medical insurance continue to be the main contributors of the non-life business.

Profits after tax dropped by 61.56% to Ksh3.54 billion down from Ksh9.21billion recorded in 2017. Net claims incurred dropped marginally to Ksh110.34billion from Ksh110.70 in 2017. Expenses and commissions increased by 1.18% in 2018 to Ksh69.35billion from Ksh68.54billion in 2017.

Industry Trends
Global trends observed in 2018 included technological developments, new insurance markets and regulatory developments. An increase in mergers and acquisitions has seen global players focus on emerging insurance markets and Kenya is no exception.

Technological developments include growing use of block chain for client on-boarding and fraud prevention. Internet of Things (IoT) has seen a rise in devices connected to insurance such as telematics and wearables for motor and health insurance respectively.
AKI is embracing technology and has developed a virtual motor insurance certificate that will make it convenient for customers to receive their motor insurance from wherever they are and at any time. The virtual certificate will also help curb motor insurance fraud by ensuring that only one motor insurance certificate is issued per vehicle. Cases of double insurance, fake certificates and stolen insurance certificates will be minimised.

Insurance regulations have continued to develop to ensure more robust supervision of players and to cater for the growth of the industry. There has been a global rise in regulatory sandboxes for testing innovative solutions in a controlled environment. In Kenya, the Insurance Regulatory Authority is developing guidelines for sandbox regulation.

In 2018, several legal and regulatory changes were proposed including four regulations on Takaful Insurance, Group Wide Supervision, Bancassurance and Micro Insurance. The regulations are yet to be enacted.

The Insurance (Amendment) Act, No.11 of 2019 amended Section 156 by providing that an intermediary shall not receive any premiums on behalf of an insurer and penalties of contravention of that provision are attached to it. Insurers are in turn expected to pay commissions within 30 days.
 
IFRS 17 is still in the horizon, however, the International Accounting Standards Board deferred the effective date to 2022 to enable it incorporate several amendments to address stakeholder concerns and implementation challenges.  The delay will be helpful to enable insurers implement this complex undertaking that has a global bearing. IFRS 17 aims to increase transparency in the accounting for insurance contracts.

The industry is still working towards complying with the Risk Based Capital requirements as the June 2020 deadline approaches.  AKI carried out a second quantitative impact study to assess the industry preparedness to meet the deadline. The industry, through AKI, will engage the regulator to address the challenges so as to ensure compliance within the stipulated time.

Find the summary presentation attached.
Download the full report here

For more information contact the undersigned.

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About Association of Kenya Insurers (AKI)
The Association of Kenya Insurers (AKI) was established in 1987 as an independent non-profit making consultative and advisory body for the insurance industry.
AKI is responsible for promoting cooperation among its members, protecting and prompting the members’ common interests, raising awareness about insurance, market research, and capacity building. The Association currently has 54 members.

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