Analysis of the Impact of Covid-19 on the Non-life Insurance Industry Activities: a Kenyan Perspective
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Date
2023Author
Cherotich, Abigael
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The COVID-19 pandemic has caused significant disruptions to economies and societies worldwide,
including the insurance industry. While various studies have been conducted on the impact of the
pandemic on the insurance sector, there has been limited research on the specific effects on non-life
insurance firms in Kenya.This study examines the impact of the COVID-19 pandemic on non-life insurance
companies in Kenya, focusing on the analysis of gross premium income and claims incurred.
The data spanning from 2013 to 2022 was divided into pre-pandemic and pandemic-affected periods.
We utilized SARIMA models to forecast expected values for 2020 and 2022 and employed the Mean
Percentage Error (MPE) metric to quantify the pandemic’s specific impact. The analysis of gross premium
income revealed a negative impact during the year 2020, with the actual total gross premium
income falling short of the expected amount by -3.1%. This decline was likely caused by reduced demand
due to economic uncertainties and decreased business activities during the pandemic. However,
in the subsequent years, 2021 and 2022, the industry exhibited resilience, with the actual total gross
premium income surpassing the expected values by 4.5% and 5.3%, respectively, indicating a promising
recovery as economic conditions improved and businesses rebounded from the pandemic’s initial impact.
Conversely, the analysis of claims incurred showed a contrasting pattern. In 2020, the total claims
incurred were slightly lower than the expected claims by -0.019%, indicating a positive outcome during
the pandemic as actual claims were lower than anticipated. This was attributed to reduced economic
activities, travel restrictions, and decreased accidents. However, in 2021 and 2022, non-life insurance
companies in Kenya faced higher claim payouts than initially expected, with actual claims incurred
exceeding the expected claims by 0.644% and 0.757%, respectively.This change could be attributed to
the normalization of economic activities, shifts in risk patterns, and potential delayed claims from the
previous year. Our findings highlight the significant impact of the COVID-19 pandemic on the non-life
insurance industry in Kenya, causing disruptions in gross premium income and claims incurred. Despite
facing challenges during the pandemic, the industry demonstrated resilience and exhibited signs
of recovery in the post-pandemic years, showcasing the adaptability of non-life insurance companies
in Kenya during challenging circumstances.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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