East Africa's life insurance business is growing, fuelled by increasing demand among the fastest growing middle class even as general insurance business' largest classes-motor and health-suffer severe losses and fraud, according to a new survey.
The survey by consultancy firm Deloitte, however, shows that group life faces slower growth compared with other business classes within the life insurance largely due to price wars.
According to the Insurance Outlook Report (2019/2020) for East Africa, motor and medical business classes are among those with the most losses, and therefore, insurers should explore other emerging business classes that have potential for growth.
In particular, the rising costs of fraud presents insurers with the challenge of being unable to adequately price risks, leading to deteriorated returns to equity.
It is estimated that fraud accounts for about 25% and 33% of total insurance premiums in Kenya and Tanzania respectively.