InsurancePart 3: Insurance Landscape in Kenya.

Jillian MarwaFebruary 1, 2023140048 min
 Source: Pixbay,

Insurance coverage is the amount of risk or liability that is covered for an individual or entity by way of insurance services. Which include auto insurance, life insurance, or more exotic forms i.e., homeowner’s insurance. Insurance helps the insured recover financially from unexpected events, such as car accidents, loss of income, health issues, etc. An insurance premium is the amount of money an individual or business pays for an insurance policy. In case of failure to pay premiums, the insured suffers cancellation of the policy and loss of coverage.

According to Lancaster University Management School Working Paper, (Rand, Graham K, 2004/046), the history of the development of commercial insurance in Kenya is related to the history of emancipation of Kenya as a nation. The British insurers saw a need to start insurance agencies to protect substantial investments against various risk exposures. By 1963, during independence, most insurance branches had been transformed into fully-fledged insurance companies. As of 2002, there were 41 registered insurers, 15 transacting general insurance businesses,2 transacting life businesses,24 composite insurers in both life and general insurers. Kenya’s insurance industry is the leading in East Africa, a key player in the Common Market for Eastern and Southern Africa (COMESA) and it is also one of the only four countries in Africa in which global property and casualty insurance giant chartis has an on-the-ground presence.

Kenya’s insurance has flourished since its formation. According to the ea. insurance outlook report 2019, the real GDP increased to 6.3% in 2018 due to strong agricultural performance but it was expected to moderate to 5.7% in 2019. Economist Intelligence Unit EIU predicts that GDP growth will average to 5.9% as of 2020-2023 due to urbanization, regional integration, structure. The insurance industry is expected to grow in gross written premium in line with historically observed growth rates.

total premium 2009-2016 kenya
Source: IRA and AKI (Association of Kenyan Insurers) report.

The total premiums table shows that there is an increase in total premiums from 2009 to focus in 2016 of KES mn 64470- 195318, KES per capita 1634- 4170, US $ mn 835- 1943, US $ par capita 21- 41, EUR 597- 1555, and EUR par capita 15- 33.

Kenya’s Life Sector update, a sizeable percentage of all households are poor to be able to save up for their long-term futures via life insurance. There is encouraging growth in density and the segment accounts for a significant portion of all activity in the insurance sector. The Association of Kenya Insurers (AKI) has published a strategic plan to promote the development of the overall insurance sector, the plan would likely benefit non-life insurance more than life insurance. Insurance Regulatory Authority IRA started its operations in May 2007, an autonomous government institution created through an Act of the parliament. Its main roles are to ensure effective regulation, supervision, and development of insurance in Kenya and to formulate and enforce standards in the insurance industry in Kenya.

In Kenya, there are three ways to buy insurance; buying directly from an insurance company, buying through an independent local insurance agent, or buying via an independent online insurance broker. According to IRA reports, awareness of insurance and products available in the market was found to be high in motor-related products, by 795 awareness of the respondents. There was 76% and 73% awareness of medical insurance and burglary/ theft insurance, respectively. The survey also indicated a low level of awareness in agricultural insurance. Educating owners of business enterprises on insurance and available products and reducing the cost of accessing insurance services would help enhance access to insurance among the targets.

Insurance companies help keep our economies strong and more vibrant in various ways; firstly, they offer financial protection for consumers, insurance can help manage uncertainty and potential loss by providing vital financial protection. Secondly, insurance companies help businesses mitigate risk and protect their employees, business insurance contributes to the growth and it also helps cover the costs of the employee’s treatment in case of injury in the job, hence avoids any wage/ salary interruption. Thirdly, insurance companies help finance economic development projects.

Kenyan insurance companies can and should utilize the power of technology to serve their customers and grow their businesses more effectively. The country’s insurance sector players face some real challenges with aligning their businesses to that underlying sense of urgency in the market and providing differentiated value-adding products that speak to customers’ anxieties and build trust at the same time. The insurance sector is poised for significant change. The regulatory authorities should continue creating awareness and ensuring standards have been upheld to build trust and public confidence for the sector. The Kenyan government has also played a big role to ensure the growth and development of the sector.

Jillian Marwa

Writer at CueAfrica Email: LinkedIn: Jillian Marwa Twitter: Jillian Marwa

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