Medical and Public Service Vehicle (PSV) insurers are emerging as the hardest hit sections in the insurance sector due to Covid-19 pandemic.
The Insurance Regulatory Authority (IRA), that is compiling a report on the impact of the virus, yesterday noted that some firms had even paid up to a Sh10 million claim per person for Covid-related treatment.
The Association of Kenya Insurers said local insurers have paid over Sh120 million in Covid-19 related claims so far.
The government has since March implemented cessation of movement including in and out of Nairobi, Mombasa, Mandera, Kilifi and Kwale which has grounded majority of PSVs, especially those plying long-distance routes.
PSV policies are usually paid monthly, meaning that a majority have not renewed them in the last three months.
IRA Chief Executive Godfrey Kiptum, however, expressed optimism that the sector would recover with the government expected to review restrictions next week.
“Insurance covers for PSVs are not being taken. The impact will be quite huge for insurers but we’re hopeful that in coming days, the sector will open up,” he said.
Mr Kiptum noted that the insurance sector had witnessed reduced premiums, cancellation of policies and non-renewal of lapsed policies. He spoke yesterday at a webinar taking stock of the Kenyan insurance industry in the wake of the pandemic.
IRA Corporation Secretary and Chief Manager Legal Affairs urged life insurers to offer a grace period for payment and renewal of premiums to policyholders. This, she noted, would give policyholders time to sort out their finances instead of cancelling their policies which could also affect them negatively.
“The authority is encouraging companies to offer policyholders’ premium holidays taking cognisant that economic times are tough,” she said.
IRA had in April issued a circular to insurance companies to stretch the holidays up to three months, however, insurers are allowed to negotiate within the terms of the contracts with policyholders.
IRA Acting Chief Manager, Technical Kalai Musee said a crackdown on rogue insurance brokers was ongoing as he warned that claimants might lose money if the brokerages were de-registered.
“Brokers usually have a bank guarantee of a minimum of Sh3 million or more. Those owed can make use of those guarantees if a broker is deregistered but if the amounts are more than the guarantee probably there will be losses that will be written off,” he said.