Britam General Insurance paid about Sh400 million to settle claims related to floods and protests that rocked the county last year, weighing down its net profit in the financial year ended December 31,2024.
The Sh400 million payout highlights the extent of disruption that the two events had on the underwriters last year. Britam’s rival, CIC General, had settled Sh700 million towards the same events by mid-December last year.
Kenya was hit by widespread floods between March and June, followed by anti-tax demonstrations that morphed into anti-government demos between June and July. The two events left a trail of death and injuries on people as well as destruction of properties.
The floods and protests-related claims saw Britam General Insurance, the subsidiary that runs short-term covers, post a 14.4 percent drop in net profit to Sh1.25 billion from Sh1.46 billion.
“In terms of those two significant events [floods and protests], we saw an increase in the frequency of claims. For example, when you look at our home and fire insurance where floods are covered, we saw an increase in claims by about 30 percent year-on-year,”James Mbithi, Chief Executive Officer of Britam General Insurance said in an interview.
“In terms of total quantum for floods and protests, we are talking of claims in excess of Sh400 million. A portion of that was reinsured so the impact on our net account was not very significant.”
The increased claims, added to about a Sh230 million rise in finance costs in an environment where interest rates were rising, saw the short-term business subsidiary become the only unit within Britam Holdings to post a decline in net earnings during the review period.
During the review period, Britam Holding's net profit rose 53.5 percent to a record Sh5.03 billion, mainly supported by Britam Life Assurance and Britam Asset Management.
Kenya’s underwriters had cautioned in July last year that political and climate change-related risks, which traditionally had a relatively small impact on the industry, looked set to disproportionately drive up claims during the review period.
The floods in Kenya for instance, followed the worst drought on record in over 40 years in many parts of the Horn of Africa – from late 2020 to early 2023.
Industry claims from floods had by September last year hit Sh5 billion, pointing to the impact of increased severity and frequency of climate-change-related risks on underwriters.
The Kenyan economy is highly exposed to climate-related hazards and the implications of climate change, according to the International Monetary Fund.
This is largely due to the climate-sensitive nature of its economy, with agriculture, water, energy, tourism, and wildlife sectors playing an important role in it.
Evolving risks such as natural disasters, cyber threats, and pandemics put pressure on insurers to adopt new models for risk assessment as regulators adopt adaptive and proactive supervision.
