Kenya: COVID-19 panics the insurance market

Shaken by the coronavirus crisis, the Kenyan insurance sector performed poorly in the second quarter of 2020.

According to the latest data from the Insurance Regulatory Authority (IRA), policy buybacks increased significantly during the review period. Thus, they saw a rise of 26% to 5.33 billion shillings (48.4 million dollars) against 4.22 billion shillings (38.3 million dollars) published during the previous similar period.

The number of lapses of insurance policies – coverages canceled due to non-payment of premiums and depletion of cash value – has also increased over the same period.

Data from the Association of Kenya Insurers (AKI) showed that the number of policy failures in the life business jumped 26.7% to 40,411 as the value at issue reached 1.53 billion shillings (13, $ 9 million), an increase of 51.9% from 733.6 million shillings ($ 6.6 million) in June 2019.

AKI Managing Director Tom Gichuhi said that “many people are struggling to keep up with premium payments while others take out loans to cope with the economic crisis.” He added: “There would definitely be an increase in divestitures because there were layoffs, wage cuts and struggling businesses.”

As a reminder, Kenya’s economy contracted 5.7% in the second quarter of last year (the deepest in nearly two decades). It is affected by the restriction measures imposed to slow the spread of the virus.

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