•A report released by AKI in July shows that Health insurance, personal accident, and last expense were are the most popular micro insurance products
•Despite Kenyans spending more on digital information and communication channels, it still ranks low as a source of insurance information.
Image: JACKTONE LAWI
The insurance sector's failure to come up with unique policies that resonate with Kenyans is the key reason for the low penetration of insurance products, according to experts.
Despite the number of micro-insurance products in the country increasing in the past seven years from 32 in 2015 to 55, the penetration rate has remained below three percent.
Industry experts now say this has been caused by a mismatch in the insurance product offered and the market needs.
KPMG Director for Digital Innovations Martin Kimani, said unlike the banking sector, insurers are to conduct a comprehensive analysis on their customer needs.
“In the insurance space, there have been notable gaps that make it crucial for insurance partners to step up and ask the right questions. If you monitor our trends, majority of the banks have been able to monitor their data analytics and their decisions are now informed by customer data,” said Kimani.
He added that for the insurance sector to grow it will require the players to explore partnership opportunities, harness robust technologies to manage relationships, develop new insurance solutions, and delve into the potential of technologies like Blockchain and AI.
Insurance experts say the government is key to unlocking micro-insurance growth through partnerships with other organisations in the private sector, investing in data and research, and education for the small-sized businesses among other incentives.
The experts spoke at a sector dialogue hosted by Absa on the digital evolution reshaping the insurance landscape.
Financial Sector Deepening (FSD) principal for innovation for resilience, Elias Omondi said that despite improvement in the insurance landscape, companies will now have to go to the base of the pyramid to tailor solutions for the informal sector
“Significant shifts towards digitisation have occurred, primarily focused on enhancing front-facing aspects. However, it's imperative to begin at the fundamental level," said Omondi.
"We need to think about new avenues, for example like I am buying education policy now for my child, yet next month we are opening schools and I may not have school fees what can we do?"
He said insurance firms should structure policy loans on top of the policies such as education, such that, if parents don’t have school fees at the moment the insurance pays, then the money is recovered as the individual pays for the education policy.
Absa Bank Head of bancassurance Julia Shisia challenged insurers to invest more on digital information and communication channels.
Despite Kenyans spending more on digital information and communication channels, it still ranks low as a source of insurance information.
“It’s about how do we get people utilising digital platforms, if we look at our population a majority are below 40 and get most of their information from internet. Then you see why the sector needs to invest in technology,” said Shisia.
An Association of Kenya Insurers report released in July shows that health insurance, personal accident, and last expense are the most popular micro-insurance products that have the potential to grow and cover a wider section of the population.
These products include crop insurance and livestock or cattle insurance, which are increasingly sold as index-based insurance, covering theft or fire, death insurance, disability, and natural disasters.