Insurance Regulatory Authority (IRA) chairman Mwambu Mabonga has said that there is low information penetration of insurance among locals in Kenya.
Mwambu argues there is a need to create awareness at the grassroots to make people understand the importance of insurance and saving.
Mwambu spoke in Nairobi on Monday during the opening ceremony of the 8th Eastern and Southern Africa regional conference on inclusive insurance.
The board chair noted that the purpose of the conference is to drive the inclusive insurance agenda and close the protection gap.
He added that it is relevant to the African insurance industry’s current situation as the country continues to struggle with the impact of the Covid-19 pandemic, business disruptions caused by many factors, and changing market and consumer dynamics.
“Our local industry is witnessing a rebound with the latest insurance industry report indicating that insurance premiums in the fourth quarter of 2022 hit Sh309.77 billion, an increase of 12.2 percent from Sh276.06 billon recorded in the fourth quarter of 2021,” he said.
Mwambu, however, said that the figures are proof of disruptions calling on industry players to develop insurance products that speak to the unique customer needs and concerns.
Mwambu pointed out that Kenyan and indeed African households are exposed to vulnerability and external shocks arising from, among others, lack of insurance to manage risks, lack of safety net programs and inadequate savings.
“While insurance services and products can offer a social safety net, insurance uptake and penetration in the continent is low and has been hampered by both sector and socio-economic challenges,” Mwambu noted.
The Former Bumula MP said that the challenges from the insurance sector include and are not limited to trust, competition, inadequate expertise, delay in settlement of claims, high cost of insurance, mismanagement and enabling laws and regulations.
Mwambu added that the insurance challenges manifest in various ways like the negative attitude towards insurance, price-undercutting at the insurance marketplace, the collapse of insurance companies and inadequate customization and innovation of insurance products in the marketplace.
“Some of the socio-economic challenges include lack of disposable income, financial literacy, insurance illiteracy, cultural and religious beliefs towards insurance and inadequate savings to purchase insurance,” he said.
He said that moving forward, there is a need to fully digitize insurance processes and solutions to reduce associated insurance costs while also increasing reach.
According to the 2021 Finances Access Household Survey, financial access increased to 83.7 percent of the population in 2021, mainly driven by the use of technology.
The same survey places access to insurance (including the National Hospital Insurance
Fund) at 23.7 percent in 2021, with 68.2 percent of the survey’s respondents had never used insurance services.
