Kenya’s insurance industry recorded gross premium of Sh 157.21 billion last year compared to Sh 139.65 billion posted in 2013, however its penetration dropped slightly on rebasing of the economy.
The annual Industry report released by Association of Kenya Insurers (AKI) on Thursday attributed the improved performance to the Kenyan Government’s policy to insure civil servants and disciplined forces new business from the region.
Insurance penetration however experienced a significant drop in 2014 with a market penetration of 2.93 percent compared to 3.44 percent in 2013 due to the rebasing of Kenya’s Gross Domestic Product (GDP).
AKI Chairman Justus Mutiga expects a quick turnaround in insurance uptake largely driven by the introduction of bancassurance by several financial institutions.
“The low penetration highlights the significant opportunities that exist 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 they will be key in increasing insurance penetration,” said Mutiga.
Individual companies are expected to grow over the next financial year with growth opportunities across the various regional economic blocs.
This has been heightened due to increased investment in manufacturing, tourism, transport and communications.
Mergers and Acquisitions (M&As) have also played a key role in the extended scope of operations.
Many companies that have gone through M&As in 2014 include Mercantile Insurance who were acquired by Moroccan based Saham Group.
Real Insurance also became part of Britam Insurance Group, Shield Assurance were acquired by Prudential Plc from the United Kingdom and UAP Holdings Limited became 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.
“With the increase in minimum capital requirements for general insurance companies to Sh 600 million and the 400 million for Life insurance companies by Treasury, we expect the trend of M&As to increase as more local companies seek funds to continue operations,” said AKI Executive Director Tom Gichuhi.