Medical insurance makes turnaround, records profits for the first time since 2021

General insurers have recorded their first underwriting profit from medical insurance in three years, offering a much-needed boost to a segment long plagued by fraud and rising costs.

Data from the Insurance Regulatory Authority (IRA) shows the industry posted a Sh397.23 million underwriting profit in the half-year ended June 2024, reversing a Sh399.7 million loss from the same period in 2023.

The underwriting profit representing premiums remaining after claims and administrative expenses marks a turnaround for the sector, which last recorded a positive balance of Sh80.43 million in December 2021.

The previous gain had been attributed to the Covid-19 pandemic, which kept many people away from hospitals.

During the review period, medical insurance premiums rose by 22.8 per cent to Sh46.3 billion, solidifying its position as the leading contributor to the general insurance industry's total premiums of Sh117.67 billion.

Claims paid to cover medical expenses also increased, rising by 24.4 per cent to Sh21.69 billion. Despite this, insurers managed to control underwriting management costs, leading to profitability.

IRA data shows that 14 out of 21 medical insurers posted underwriting profits in the first half of 2024.

The top performers were Old Mutual (Sh593.57 million), APA Insurance (Sh422.66 million), Trident (Sh254.1 million), Jubilee Health (Sh159.71 million), and Heritage (Sh105.1 million).

This marks a shift from the same period in 2023 when only eight insurers posted profits while 13 recorded losses.

Medical insurance has traditionally been a loss-making business due to widespread fraud and price undercutting.

The only exception in recent years was during the Covid-19 pandemic when lockdowns and fear of infection kept hospital visits low.

This led to an underwriting profit of Sh1.29 billion in 2020, followed by a modest Sh80.43 million gain in 2021.

However, as normalcy returned, insurers slipped back into losses until the latest turnaround in 2024.

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• Business
• Health
• Insurance Regulatory Authority
• IRA
• medical insurance
• insurance underwriting
• Old Mutual
• APA Insurance
• insurance premiums
• Medical insurance makes turnaround
• records profits for the first time since 2021