Kenyan motorists are set to pay 50% more insurance premium for the vehicles from next year as insurance companies have adjusted their rates.
The increased pricing from 2022 will see comprehensive cover of private and commercial vehicles go up by almost 50% depending on the underwriter.
Insurance companies that have raised their rates argue that the business has been a loss-making venture due to fraud and price undercutting. According to the Insurance Regulatory Authority (IRA) data, underwriting losses in 2020 jumped to $9.9 million.
Some insurance companies like Sanlam and ICEA Lion have already started sending notifications to customers alerting them of the changes to the pricing.
IRA has been pushing for increased premiums to prevent underwriters from making losses. A review carried out by Agency in October 2020 revealed that 20 insurance companies or 35 per cent of 56 licensed businesses were facing capital shortfall.
In 2020, underwriters reported a drop in insurance premiums paid by motorists by 5% to $380.91 million. The drop was attributed to Covid-19 restrictions which saw many people park their vehicles at home.
The increase of vehicle insurance comes amidst concern of low insurance penetration in Kenya. According to the 2020 Financial Stability Report by the Central Bank of Kenya (CBK), insurance penetration in Kenya is at 2.4% while the global average is at 7.2%.