Motor vehicle insurers cut losses by Sh2.7bn
Second-Hand Cars at a Container Freight station at Miritini in Mombasa County on February 4, 2022. Insurers trimmed losses incurred on motor vehicle covers by Sh2.7 billion between July and September 2022, even as some players in the industry denied some low-model vehicles comprehensive covers.
Insurers trimmed losses incurred on motor vehicle covers by Sh2.7 billion between July and September 2022, even as some players in the industry denied some low-model vehicles comprehensive covers.
Insurance Regulatory Authority’s (IRA) report on the industry during the third quarter of 2022 shows that while the general insurance business recorded a Sh2.26 billion loss during the three months, losses associated with covers issued to motor vehicles reduced from Sh7.3 billion to Sh4.6 billion.
Losses on covers taken for private motor vehicles dropped by 40 per cent in the three months to September 2022, even as the industry tightened the noose, denying covers to some low-value vehicle models, falling from a loss of Sh4.8 billion in July- September 2021 to Sh2.9 billion during a similar quarter in 2022.
The insurance industry continues to face challenges in about half of the different classes within the general business, with six of the 13 classes reporting losses.
“The underwriting performance of general insurance business was a loss of Sh2.26 billion which was an improvement from a loss of Sh4.13 billion reported in Q3 2021,” IRA stated.
This means that the value of premiums customers pay to get cover falls short of the money the industry is spending settling claims, paying commissions and on management expenses.
Among other classes recording losses within the general business are Motor Commercial (Sh1.75 billion), personal accident (Sh868 million), Medical (Sh849 million) and Engineering (Sh196 million).
Motor private class
But the Motor private class has been recording the highest loss and towards the end of 2022 triggered a new action by different insurers, to deny comprehensive cover to several vehicle models, including Toyota Probox, Succeed, Sienta, Passo and Porte.
“After a comprehensive review of our motor private book and the loss trends, we wish to communicate that there are vehicles whose usage has been misemployed and therefore have proven to be a challenge when settling claims,” GA Insurance told its business partners in October.
During the three months to September, the insurers reported claims incurred amounting to Sh56.85 billion, a 10.8 per cent increase from Sh51.30 billion reported in the third quarter of the previous year.
