Rising payouts for motor vehicle crashes continue to dig into the earnings of Key Insurance Limited, but the company has managed to keep the brunt of the financial impact at bay through a mix of premium product expansion and strategic investments.

Key Insurance doubled its earnings to $15.8 million for the second quarter ending June 2024, driven by higher revenue numbers and an investment portfolio that recorded a hefty 42 per cent growth year-on-year. The company attributed the growth in its investment portfolio to its ability to capitalise on elevated interest rates while remaining agile in response to market changes. Meanwhile, steady premium growth in the motor portfolio, which now contributes 65 per cent to the insurance revenue, was largely responsible for an 8 per cent increase in revenues to $760 million.

However, the quarter also came with challenges.

“Insurance service expenses increased by 17 per cent in the quarter ended 30 June 2024 and 16 per cent in the six-month period ended 30 June 2024 when compared to the respective prior year corresponding periods. While we continue to manage our core expenses, there was an increase in the frequency and severity of motor vehicle accidents which resulted in claim expenses increasing by $105.2 million or 21 per cent in the six-month period ending 30 June 2024 compared to the corresponding period in 2023,” the company said in the preamble to the quarterly financial statements.

Still, the challenge being experienced by Key Insurance is not unique to the company. The number of crashes and road fatalities continues to surge in Jamaica. As of July 31, Jamaica has recorded 222 road fatalities since the start of the year, according to data released by the Island Traffic Authority. The authority said the main causes of these fatalities were speeding, failure to keep to the proper traffic lane, and pedestrians walking out or standing in the roadway. The limited number of public ambulances to respond to road accidents has exacerbated the issue. Road crashes are projected to reach 412 this year, slightly down from 425 road deaths last year.

To balance the rising costs, earlier this year Key expanded premiums under the motor portfolio. It foresees a future filled with headwinds from the challenging economic climate, increasing motor claims, projections for an active hurricane season, and the risk of falling interest rates, but is more focused on internal resilience and strong potential for growth.

“Management continues to execute its strategic plan which is focused on increasing revenue and improving profitability,” the company, which is headed by Tammara Glaves-Hucey, said.

“We are prepared to face market challenges head-on and management is continuously assessing the non-motor and motor portfolios to recognise, identify, and capitalise on opportunities to optimise operational efficiency and increase profits. Increased customer engagement and strategic relationship building will be pivotal to our growth strategy and continued success,” it continued.

As part of its comprehensive risk mitigation efforts, Key Insurance says it continues to vigilantly monitor the local and global markets and remains nimble in adjusting its strategies as needed, particularly in response to changes in the macro-economic environment.

“Overall, Key continues to place high importance on managing risks, identifying growth opportunities, enhancing the customer experience, while staying abreast of trends to improve our market position. The company remains focused on creating shareholder value and fostering sustainable growth that benefits all stakeholders,” it said.