Underwriters cut vehicle insurance losses by 23pc

 

General insurers’ underwriting losses from private and commercial vehicles dropped by 22.9 percent to Sh2.42 billion in the half-year ended June, underlining the gains from the stringent approval and increased pricing measures adopted by the industry.

The latest industry data from the Insurance Regulatory Authority (IRA) shows the underwriting losses improved from the Sh3.14 billion loss that had been posted in the half year ended June 2022, largely helped by reduced losses in insuring private vehicles.

Insurers cut the underwriting losses in motor private insurance by 42 percent from Sh2.44 billion to Sh1.4 billion. The losses in motor commercial however increased by 44 percent from Sh700 million to Sh1 billion.

Read: General insurers cut losses 41 percent to Sh3.7 billion

Motor vehicle insurance is the second largest class of general insurance and made up 27.5 percent of the gross written premiums during the review period after medical insurance (35.9 percent). The two classes therefore heavily influence the underwriting results for insurers.

Claims paid to motor private customers rose by 3.2 percent to Sh8.96 billion in the period premiums collected rose by 12.6 percent to Sh14.68 billion. Payments to commercial vehicle claim shot up by 23 percent to Sh8.96 billion as premiums increased by 9.9 percent to Sh14.2 billion.

The improved motor vehicle underwriting results were despite many insurers having seen an increase in the value of claims paid, partly on the increased price of spare parts and imported medicine as the shilling continued to shed value against the dollar.

The shilling had shed 13.9 percent of its value in the first six months of the year and has extended the year-to-date devaluation to 25.1 percent against the dollar as at the start of Thursday, making imports such as car parts more expensive.

Many insurers have been aggressive in revising premiums upwards to reflect the level of risk in the market and also dropping comprehensive covers for some models of vehicles deemed too risky.

There have also been insurers adopting telematics—in-car monitoring devices— to adjust premium rates based on policyholders' mileage and driving habits.

APA Insurance Company in November last year announced that it had blacklisted 28 models of Toyota, Honda, Maruti, Mazda, Nissan and Suzuki cars, barring their owners from accessing comprehensive covers over rampant misuse of the vehicl

GA Insurance in the same period also stopped issuing comprehensive covers for Toyota Probox, Toyota Succeed, Toyota Sienta, Toyota Passo, Toyota Porte and all Suzuki models valued at less than Sh1 million.

APA had the highest market share (7.63 percent) in motor private followed by GA (7.3 percent).

In the motor commercial, APA and GA had the second and third largest market shares at 7.81 percent and 7.38 percent respectively.

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Occidental Insurance in 2019 dropped 25 car models citing their "rare and obsolete" car parts, which were expensive or unavailable.