Kenya’s insurance industry recorded a sharp decline in reported fraud cases in the final quarter of 2024, as firms posted record profits boosted by government bond investments, according to the Insurance Regulatory Authority (IRA).
- •Only 29 fraud cases were reported between October and December last year, down from 58 cases in the same period of 2023.
- •The majority involved false motor accident claims, fake insurance certificates and attempts to obtain money under false pretences.
- •During the same period, the industry’s profit after tax jumped nearly four-fold to Ksh52.1 billion, compared with Ksh 13.3 billion the year before.
“The drop in fraud points to tighter supervision and stronger enforcement collaboration across the sector,” the IRA noted in its quarterly review. The regulator said several suspects were arrested and charged following investigations carried out in partnership with the Insurance Fraud Investigation Unit (IFIU). Other cases included theft by insurance agents and impersonation of IRA officials.
Fraudulent claims have long been a drag on Kenya’s insurance industry, inflating costs that are ultimately passed on to honest policyholders through higher premiums. The latest figures suggest that sector-wide efforts to curb the problem including stricter monitoring of agents, digital verification of motor certificates, and enhanced consumer awareness may be bearing fruit.
Industry Profits Soar
The industry’s gains were fuelled by a 61% rise in investment income to Ksh132.1 billion, as insurers poured funds into government securities that offered attractive yields amid high interest rates.
The premium reported by long-term insurers in Q4 2024 amounted to Ksh 191.20 billion, a growth of 12.5%. Their asset base grew by 20.9% to Ksh 880.92 billion and was largely composed of income generating investments of Ksh 840.59 billion (95.4%). Of the total assets, 10.2% (KES 89.49 billion) was funded through shareholders’ funds (equity).
In Q4 2024, general insurance business’s gross premium income amounted to Ksh 204.10 billion. Underwriters incurred claims amounting to Ksh 95.74 billion at the end of Q4 2024. The claims incurred loss ratio was 70.4% in the quarter under review compared to 67.9% in Q4 2023.
Long term reinsurance companies reported total net premium income (NPI) of Ksh 3.80 billion compared to Ksh 3.14 billion reported in Q4 2023, representing an increase of 21.1%.
In contrast, general reinsurers’ reported a decrease in net premium income of 1.5% from Ksh 29.63 billion reported by the end of Q4 2023 to Ksh 29.19 billion in Q4 2024. They incurred claims amounting to Ksh 15.96 billion and direct expenses (commissions and management expenses) of Ksh 12.26 billion.