CORPORATE SCENE product extension as the market demands , we became the first reinsurer to launch Retakaful window . We went public in 1997 when the first woman chairperson rung the bell at the Nairobi Securities Exchange . We have a physical presence in Uganda , Zambia and Ivory Coast .
What pain points have you navigated in your journey to-date ?
We have without doubt experienced challenges along the way . It is however important to note these are challenges for the whole insurance industry in general and not specific re-insurance or Kenya-Re in particular and I will talk about five of them here-under :
Fraud : Fraud remains one of the greatest challenges facing the insurance industry . Estimates , generally put , indicate fraud at around 10 % of the property or casualty insurance industry ’ s incurred losses and loss adjustment expenses each year . Fraudulent claims are particularly prevalent in motor and medical claims although it is difficult to tell the exact magnitude of the menace .
Premium Undercutting : Low insurance penetration has led to cut throat competition . This has caused industry players to undercut in product pricing in order to gain market share despite the risk that comes with product mispricing . Another cause of price undercutting is the high returns in the investment market . High returns in the investments market will lead to high profitability leading to increased retained earnings . In the era of risk base capitalization , companies will continue to undercut with the aim of compensating the decline in premiums by the high profit returns .
Risk Based Capital : The Insurance Act has undergone various revisions in 2017 ( The Insurance Act 2017 ). Changes related largely to harmonizing the risk-based capital provisions within the Act and the creation of perpetual licenses for insurance companies . The amendments will result in additional deduction to the capital available putting strain on Adequacy Ratio for most underwriters . It poses a major problem to the industry with regards to players who have continuously been making loss . This limits internal ability to raise capital cushion to cover risk held . This will force the regulator to review the priority in the industry with the need to have well capitalized , stable and secure industry while at the same time ensuring that only worthy players are left in the industry by culling non-compliant underwriters while maintaining calm .
Regional regulators : Insurer ’ s subsidiaries are facing challenges in the areas of operation . In Tanzania , insurance brokers must in future be at least two thirds ( over 66 %) owned and controlled by Tanzanian citizens . Customers have to pay insurance underwriters all premiums directly , even where they are using brokers . Insurance cover for a Tanzanian resident person or company may only be placed with a Tanzanian registered insurer . The exception to this is where classes of insurance are not available from a Tanzanian registered insurer . All ground transport insurance , marine insurance and air cargo insurance
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