Reinsurer, Kenya Re, expects to lose KSh1 billion in revenue from growing claims and rebates on premiums due to the pandemic. According to the Company Managing Director, Jadia Mwarania, the 5% revenue dip is a worst-case scenario. The regional reinsurer had earlier projected income of KSh19 billion down from KSh21.1 billion last year.
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The MD also expects the insurance industry to shrink by 2-3% following slowed GDP growth.
“…We expect the business to shrink in tandem with the lower GDP growth as projected by the government at the rate of 2.6% this year. On our end, we estimate the industry growth to shrink by at least 2% to 3%,” Capital quotes Mwarania’s interview.
Therefore, the business will advance its collection of premiums from underwriters to make up for the lost revenue. Moreover, the company will also increase dollar reserves to accumulate hard currency reserves awaiting increasing foreign contract claims.
“We are generating weekly reports to monitor targets and performance. At the same time, we have enhanced turn-around times for claim processing to a maximum of 48 hours,” added Mwarania.
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Credit rating agency, Fitch Ratings, projects adverse effects of the pandemic on the insurance sector due to rising claim costs. Further, the agency also projects a negative impact on interest rates impacting money invested on government instruments.
