The government, through the Insurance Regulatory Authority(IRA) is looking to increase the current premium rates which consequently will make insurance more expensive.
The new rates are set to be determined for selected classes. This is with an aim to strike a balance between the affordability of the covers and stability of underwriting companies.
A search for a consultant for IRA is underway to recommend changes to the methods that are used in calculating premiums paid by customers in general insurance. The general insurance covers whose premiums are to undergo changes as per the recommendation, cover motor vehicle, personal accident, fire, and health.
However, the premiums suggested will have to show how they are likely to impact the capital ratios of insurers and how affordable they will be to customers.
Speaking to kenyans.co.ke, a number of Kenyans expressed their views on this move by IRA with many terming it mistimed, especially with the struggling economy.
“We are already struggling to pay the insurance covers right now after Covid-19 interfered with our businesses. What happens when they increase the rates?” said a respondent who did not wish to be named.
“Insurance companies are encouraging people to get insured while on the other hand, they want to increase the rates. They should instead lower the rates to encourage more people to get the covers,” Kenyans noted.
kenyans.co.ke reached out to an insurer to get their view on the push by IRA to increase premium rates and they said, "The rates are yet to be increased, therefore, we don't have a say on that as of now. We can only give our views when the new rates are implemented."
IRA noted that the current rates and risk classification face challenges. This is even with concerns being raised about the availability and affordability of insurance products.
“The current rate pricing and risk classification face some significant challenges. Besides a competitive market environment, various risk-rating factors commonly used are being questioned,” said IRA.
The regulator also pointed that this move aims at analyzing the current premium rating practices in the Kenyan insurance industry and the competitiveness of the rates filed at IRA based on clarification.
With insurance companies said to have been facing financial strains, the IRA encourages insurers to pick risk-rating factors which can be accurately determined as well as earn customer acceptance without putting the companies at the risk of collapsing.
“Premium rating should be based on the comprehensive knowledge of individual customer’s needs and to design from this knowledge product for the respective target group,” IRA noted.