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Kenya Re Benefits From Reinsurance Law

Has aided Kenya Reinsurance to 17% growth in its gross premium in the first half of 2009

The changes in Kenyan law making it mandatory to re-insure life insurance has aided Kenya Reinsurance Corporation (Kenya Re) to 17% growth in its gross premium in the first half of 2009 – reported Business Daily.

Previously, insurers could re-insure some of their business overseas, all treaties for life underwriting will now be localised. As a result, Kenya Re’s gross premium rose to Sh1.9 billion from Sh1.7 billion realised during a corresponding period last year. This growth propelled its pre-tax profit upward by 4% from Sh839 million to Sh874 million.

Like other local insurance companies, Kenya Re’s main business driver is general insurance. For the period under review, premium from general insurance rose marginally by 3% to Sh569 million from Sh552 million while life insurance brought in Sh162 million.

The operational and other expenses went up by 9% from Sh733 million to Sh800 million, raising questions about the effectiveness of the cost cap measures.

The recent growth of small-and-medium-sized enterprises (SMEs) has also attracted insurance companies, with various players in the industry beginning to roll out products packaged for and targeted specifically at these new businesses. However, according to industry experts, the diverse nature of the SME sector continues to hamper standardisation of insurance products, as quoted in Business Daily.