Kenyan insurers and reinsurers faced challenging economic factors in 2020 which made the year a difficult one as the market generated KSH233bn ($2.1bn) of gross written premium, according to a new report from AM Best.
However, Kenya’s relatively stable economy and strengthening regulatory environment, compared with other markets in sub-Saharan Africa, are expected to continue to facilitate the development of its insurance sector.
AM Best’s new report, Price Competition Inhibits Growth Potential of Kenya’s Insurance Market, notes that while low insurance penetration by international standards means the market has good long-term growth potential, stiff competition has led to price undercutting in recent years, hampering premium growth and contributing to the sector’s underwriting losses.
There are more than 50 licensed insurers operating in Kenya, and in 2020, the regulator reports, the market generated KSH233bn ($2.1bn) of gross written premium, representing growth of 2 percent compared to the previous year (6 percent).
In the five years to 2020, GWP grew on average 6 percent per year, however inflation at between 5 percent and 8 percent dampened that growth.
Meanwhile market conditions have remained soft, which has also kept a lid on real GWP growth. However, AM Best warns that the market is saturated, with 35 companies competing for circa $1.2bn of premium in the non-life segment and no single insurer having a market share greater than 8 percent
The number of non-life policies in force grew an average of 13% per annum between 2016 and 2019 – 7% higher than GWP growth in the same period, implying a growth in the total sum insured by the market has not resulted in a corresponding growth in revenue.