The Association of Kenya Insurers (AKI) recently released their Annual Industry Report. The industry experienced improved performance compared to previous years, this being attributed by AKI to the Kenyan Government’s policy to insure civil servants and disciplined forces.
The industry recorded gross premium of Ksh. 157.21 billion in 2014 compared to Kshs. 139.65 billion in 2013. However, Insurance penetration experienced a significant drop, with a market penetration of 2.93 percent compared to 3.44 percent in 2013. This was attributed to the rebasing of Kenya’s Gross Domestic Product (GDP) which was conducted in late 2014.
Nonetheless, AKI Chairman Justus Mutiga expects a reversal in insurance uptake fortunes because of the introduction of bancassurance by financial institutions such as National Bank. He believes that there are significant opportunities in the Kenyan Insurance market especially in commercial lines such as oil, real estate and infrastructure. Micro insurance, bancassurance and agriculture insurances are in the early stages of development and according to Mr. Muthiga, they will play a crucial role in increasing insurance penetration.
Individual companies are expected to grow over the next financial year with growth opportunities across the various regional economic blocs largely due to increased investment in manufacturing, tourism, transport and communications. Several insurance firms also went through Mergers and Acquisitions (M & As) in 2014 thus extending their scope of operations.
For instance, Mercantile Insurance was acquired by Moroccan based Saham Group, Real Insurance became part of Britam Insurance Group, Shield Assurance was acquired by Prudential Plc from the United Kingdom and UAP Holdings Limited is now part of Old Mutual Group from South Africa. Others are Cannon who are now part of Metropolitan group South Africa and Gateway who are now part of Sanlam South Africa.
AKI Executive Director, Tom Gichuhi, believes that trend of mergers and acquisitions will increase as more local companies seek funds to continue operations as a result of the increase in minimum capital requirements for General Insurance companies to Shs. 600 million and to Shs. 400 million for Life Insurance companies by Treasury.