Low pricing of policies has hit underwriting income of firms in the popular motor insurance segment. FILE PHOTO | NMG
The revelation by the
Association of Kenya Insurers (AKI) that premiums undercutting by firms
seeking to protect their market share is the primary driver of
underwriting losses in the industry
should be a call to action.
should be a call to action.
According
to AKI, low pricing of policies has particularly hit underwriting
income of firms in the popular motor insurance segment, thus
contributing to a motor private loss of nearly Sh2.12 billion and Sh1.33
billion for public service vehicles.
Under-pricing of
policies by insurers, while giving some firms a competitive edge over
others, has proven over time to be a race to the bottom. The trend,
combined with other factors such as fraud, has also seemingly affected
the companies’ ability to settle claims payments as underwriting
earnings dwindle.
The Insurance Regulatory Authority
(IRA) must step in and perform its watchdog role by investigating the
specifics of what is ailing the industry as well as enforcing claims
payments by firms to policy holders.
A growth in the
number of claims paid will effectively lead to greater trust by the
public, which will in turn lead to more people taking up insurance
policies.
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