The medical insurance sector in Kenya has made a significant turnaround, recording its first underwriting profit in three years. This marks a crucial recovery for an industry that has long been weighed down by fraudulent claims and rising medical costs.
According to data from the Insurance Regulatory Authority (IRA), general insurers posted an underwriting profit of Sh397.23 million in the first half of 2024. This is a major reversal from the Sh399.7 million loss reported during the same period in 2023. The last time the industry recorded a positive balance was in December 2021, with a modest profit of Sh80.43 million.
Underwriting profit, which reflects the amount remaining after claims and administrative expenses are deducted from earned premiums, is a key indicator of an insurer’s financial health. The latest figures suggest that insurers have taken significant steps to address the challenges that have historically made medical insurance a loss-making business.
Several factors have contributed to this turnaround, including increased premium collections, better management of operational costs, and improved fraud detection measures.
Higher Premiums Collected
During the first half of 2024, medical insurance premiums surged by 22.8% to reach Sh46.3 billion, reinforcing the sector’s position as the top contributor to the general insurance market. This represents a major boost in revenue compared to previous years.
Claims Management and Cost Controls
While claims paid out for medical expenses also increased by 24.4%, reaching Sh21.69 billion, insurers successfully controlled underwriting and administrative costs. This played a key role in ensuring overall profitability.
Shift in Market Performance
IRA data indicates that 14 out of 21 medical insurers posted underwriting profits in the first half of 2024. This is a stark contrast to the same period in 2023, when only eight insurers were profitable while 13 recorded losses.
The top performers in the sector included:
Old Mutual – Sh593.57 million
APA Insurance – Sh422.66 million
Trident – Sh254.1 million
Jubilee Health – Sh159.71 million
Heritage Insurance – Sh105.1 million
This indicates a growing ability among insurers to operate profitably despite prevailing challenges.
Medical insurance has traditionally been a loss-making business, mainly due to fraudulent claims, price undercutting, and rising healthcare costs. The only exception in recent years was during the Covid-19 pandemic, when hospital visits declined significantly.
In 2020, insurers recorded an underwriting profit of Sh1.29 billion due to reduced claims as a result of lockdowns and public hesitation to visit hospitals. However, once normalcy returned, insurers slipped back into losses, struggling to balance high claims with affordable premiums.
This trend persisted until the recent turnaround in 2024, signaling that the industry may be finding long-term solutions to its financial challenges.
The Road Ahead for Medical Insurance
The latest profitability figures are a positive sign, but industry experts caution that sustaining this growth will require continuous improvements in fraud detection, pricing strategies, and customer service.
Key areas to watch include:
Digital Transformation: Insurers are expected to invest more in technology-driven fraud detection systems. Artificial intelligence (AI) and data analytics could help identify suspicious claims, reducing unnecessary payouts.
Regulatory Support: The IRA may introduce additional policies to strengthen fraud prevention and enhance consumer protection.
Pricing Adjustments: To remain competitive while ensuring profitability, insurers must strike a balance between affordable premiums and sustainable claims management.
With the medical insurance sector showing signs of stability, insurers now have an opportunity to build on this momentum and create a more resilient industry. If the positive trend continues, policyholders may also benefit from improved services and competitive premium rates.
As Kenya’s healthcare landscape evolves, medical insurance remains a critical pillar in ensuring accessible and affordable healthcare for citizens. The sector’s recovery is not only good news for insurers but also for the broader economy, as a healthy insurance market contributes to financial stability and investment growth.
