General insurers have successfully curtailed underwriting losses associated with private and commercial vehicles by an impressive 22.9%, totaling KES 2.4 billion in the half-year ending June. This noteworthy reduction in losses is a direct outcome of stringent approval protocols and enhanced pricing strategies implemented industry-wide.
Data recently released by the Insurance Regulatory Authority (IRA) highlights a significant improvement compared to the previous year, showcasing a substantial decrease from a KES 3.1 billion loss recorded in the corresponding period of 2022.
This improvement is primarily attributed to reduced losses in private vehicle insurance. In a notable accomplishment, insurers achieved a 42.0% reduction in underwriting losses in motor private insurance, dropping from KES 2.4 billion to KES 1.4 billion.
However, in contrast, losses in commercial motor insurance experienced a 44.0% increase, rising to KES 1.0 billion from KES 700.0 million.
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Motor vehicle insurance, constituting the second-largest category in general insurance, represented 27.5% of gross written premiums during the review period, closely trailing behind medical insurance, which held a share of 35.9%. These two categories significantly influenced insurers’ underwriting results.
Despite a 3.2% increase in claims paid to motor private customers, totaling KES 8.9 billion, the period witnessed a 12.6% surge in premiums collected, reaching KES 14.7 billion. Similarly, payments for commercial vehicle claims increased by 23.0% to KES 8.9 billion, accompanied by a 9.9% rise in premiums, totaling KES 14.2 billion.
Despite facing heightened claims due to rising spare parts prices and currency devaluation against the dollar, insurers persisted in enhancing their risk evaluation strategies. This involved upward revisions of premiums to accurately reflect market risk levels and selectively discontinuing comprehensive covers for high-risk vehicle models.
The adoption of telematics, utilizing in-car monitoring devices, emerged as a pivotal tactic for insurers. This technology enabled tailored premium adjustments based on policyholders’ mileage and driving behaviors, facilitating more precise risk assessment.
APA Insurance Company and GA Insurance took assertive measures by blacklisting specific vehicle models from comprehensive covers, aiming to curb misuse and effectively manage risk.
As insurers continually adapt their strategies to evolving market dynamics, the industry has demonstrated resilience and adaptability in mitigating losses while ensuring prudent risk management practices.
These proactive measures underscore insurers’ commitment to sustainable and profitable operations in an ever-evolving insurance landscape.
