Insurance firms in Kenya saw their net earnings in 2020 decline by 42.5 per cent to Kes8.7 billion from Kes15.1 billion recorded in 2019 due to Covid-19 pandemic.
However, the sector weathered COVID–19 pandemic with assets increasing by 7.4 per cent to Kes761 billion even as gross premium income edged up by 1.5 per cent to Kes232.9 billion last year.
Kenya Financial Sector Stability Report 2020 report says insurance penetration rate, which is measured by the ratio of insurance premium to GDP, remained at a flat low of 2.3 per cent last year, which is below 7.4 per cent global average.
Last year, insurers undertook to expeditiously settle claims related to COVID-19 besides offering a three-month grace period to policyholders as the sector set to mitigate the impact of the pandemic on customers.
In the year under review, the sector invested more in government securities, raising the share of total assets to 67.5 per cent in 2020 from 61.6 per cent in 2019.
However, investment in property dropped by marginal 1.3 per cent, reflecting the impact of COVID–19 pandemic on real estate and construction sectors in the country.
Further, the value of ordinary shares held by insurers declined by 31.2 per cent last year reflecting loss in share prices as investors exited the Nairobi Securities Exchange.
“Uncertainty regarding COVID–19 pandemic intensity and duration continues to weigh negatively on the sector’s returns on investments in equities, reduction in premiums growth due to low business activities and deteriorating household livelihoods, and increased insurance claims,” notes the report in part.