Nearly nine years ago, I projected that in five years long term insurance would overtake general insurance. At the time, general insurance was sitting pretty at 1.5 times the size of long term insurance, but the latter had growth, consistently outpacing general insurance.
Fast forward and the Insurance Regulatory Authority’s (IRA) sectoral report for quarter three of 2025 now places the comparative factor at 1.1, indicating that parity is approaching fast. My five-year estimation, admittedly, was a bit ambitious, but the long term – general insurance ‘flippening’, in my opinion, will materialise by 2027.
My next big call is more near-term; I predict that general insurance will experience its worst underwriting results on record in 2025.
Granted, my ‘prediction’ is actually a retrodiction, but I say this because the industry’s full year (Q4) reports are usually disseminated around the second half of the following year, hence my Janus-esque forward-looking-hindsight.
The IRA’S Q3 report, however, supports my bombast, reporting a staggering Sh7.8 billion underwriting loss for general insurance, an almost outlandish 393 percent year-on-year increase in losses from the Sh1.6 billion recorded in Q3 of 2024.
Put into perspective, Q3 losses from 2022 to 2024 combined were Sh7.9 billion, Q3 2025 alone was only shy of that by Sh118 million. As disclosed in the report, general insurance premiums grew 9.2 percent while claims went up 14.7 percent, rising approximately 1.6 times faster than premiums. Roughly put, for every Sh100 of additional premiums, general insurers are shelling out Sh160 in additional claims.
Furthermore, despite the furor on automation and artificial intelligence, general insurance direct expenses grew 19.7percent, piling even more pressure on tepid top-line growth.
Reaching across the aisle to my actuarial colleagues and their penchant for outlier testing, I must stress that general insurance has recorded underwriting profits only once in the last 13 years, making its profitability, rather ironically, the outlier rather than the norm.
In comparison, the long term industry is living in a veritable oasis. As of Q3 last year, long term insurers posted a 12.5 percent gross premium growth, buffeted by a whirlwind 61.3 percent growth in investment income, which stood at Sh103.4 billion; although this surge can be attributed to strengthened capital markets and favourable pension regulations.
Putting into context this truly astounding fete, long term insurance’s investments can comfortably cover their entire claims book (Sh97.7 billion) with room to spare.
For comparison, general insurance investment income (Sh15.9 billion) can only cover 19.1 percent of its underwriting loss. Granted, similar to general insurance, long term recorded a 21 percent increase in direct expenses and a 24 percent increase in claims and policyholder benefits, but with long term also enjoying its strongest retention rate of the past six years (94.5 percent compared to general insurance’s 69.8 percent), the contrast in fortunes of our two protagonists is indisputable.
The 2025 Insurance Sub-Sector Report by FinAccess and IRA affirms this line of thought, indicating that despite the diverging insurance access and usage trend, the two facets share cost as an underlying factor.
According to the report, 76.2 percent of respondents cited cost as their most significant barrier to access while 61.4 percent indicated their biggest impediment to usage is affordability.
Fate loves irony, so amidst an industry grappling with rising costs, the cost of the industry’s service de facto, is the industry’s largest growth inhibitor.
I am in no way trying to chastise our insurance industry. What I am lamenting is the casual disregard for basic self-scrutiny at the expense of lofty futurisms.
To sum up this antithesis, IRA’s Q3 2025 report showed that new products developed grew threefold, from 15 the previous year to 45, more than the last five Q3s combined.
However, reported fraud cases also shot up from 15 to 57 year-on-year, the highest recorded for such a period in over five years.
As we await the industry’s final reports and as 2026 gathers momentum, perhaps it is time we revisit the paradox with which we began: access to insurance is declining even as usage rises. This is not anomalous and is a signal that the industry is wrestling with contradictions it has yet to reconcile.
On one hand, we innovate relentlessly, creating new products, digital platforms and AI-driven underwriting. On the other, the fundamentals remain stubbornly unresolved, among them rising claims, mounting fraud, structural inefficiencies and a widening affordability gap for the very public we seek to insure.