- According to the IRA, policyholders in Kenya pay Sh43.billion for non-existence insurance
- Kenya's insurance penetration rate of 2.4% is the lowest in 15 years
Insurance customers are sickened by bad experiences due to complexity in payment of claims and limited information on the policies, which has been brought about by insurance brokers, a report reveals.
The customer loyalty industry benchmark released by an integrated customer experience firm, Ajua, shows that 81 per cent of companies with strong capabilities and competencies deliver an excellent customer experience and outperform their competition while 91 per cent of customers won't do business with you a second time if you butcher the first encounter.
Information gap about various insurance cover was also noted and customers cited lack of finances and information as reasons for not having various covers.
Last year, data from the regulator revealed that insurance penetration in Kenya dropped to 2.43 per cent of Gross Domestic Product (GDP), the lowest in 15 years -- on the back of price undercutting in an industry where players are facing increasingly tough competition.
Across the continent, South Africa recorded the fastest growth in penetration at 17 per cent of GDP, followed by Namibia at a distant 6.7 per cent.
Kenya's insurance penetration is, however, the best in East Africa.
According to the Insurance Regulatory Authority (IRA), policyholders in Kenya pay Sh43.billion for non-existence insurance and this money is lost because brokers fail to remit the money to the insurer on behalf of the policyholder resulting to lose due to insurance fraud.
An economic survey 2019 by the Kenya National Bureau of Statics concurs to IRA since commissions and benefit payments recorded marginal declines of 1.2 per cent and 1.4 per cent during the review period of 2014-2018 explaining the loss caused by brokers who shrug off payment to the insurers.
The risk of customers falling victims of fraud will now be reduced as the Amendment Act of 2019 bars brokers from handling cash on behalf of insurers.