Overview Of Insurance Sector In Kenya

Kenya has been one of the countries with a lower insurance penetration rate as compared to the global average. Lack of insurance awareness coupled with unequal distribution of resources and high rates of unemployment was a major hindrance for the insurance business in Kenya.

 

However, the introduction of long-term development plans by the Kenyan government to boost socio-economic growth and elevate Kenya’s status to a middle-income country, is expected to promote financial inclusion in the upcoming years. The growing economy supports increasing insurance penetration and thus opens a window for the growth of an insurance company in Kenya. Currently the insurance industry in Kenya consists of less than hundred companies with general insurance being the leading player.

 

Increase in capital investment has led to the consistent growth of  life insurance in Kenya. Life insurance offers long term coverage and also provides financial support at various stages of the buyer’s life including untimely demise. Life insurance can be categorized into ordinary life insurance, group insurance, pensions and investment contracts. The country has experienced a rise in the number of customers availing retirement products thus establishing pension as the major contributor to the life insurance market. The growth of this sector demands reduced cost of life cover and investment in micro insurance to boost penetration rates and make products affordable for all customers.

 

Non-life insurance consisting of medical insurance and motor insurance in Kenya, has dominated the insurance sector in Kenya for a decade. Non-life insurance in Kenya is spread across fourteen categories ranging from sectoral insurances like engineering, commercial, marine, aviation to emergency coverages like medical, theft, fire and work injury benefits.

While motor and medical insurances have the maximum number of buyers, the penetration value is still below the global average. Thus, the fast-soaring GDP, less insurance buyers and competition among the insurance companies leaves the companies struggling for improving their market share.

 

The rapidly changing scenario of the insurance industry in Kenya, requires restructuring the operations with customer-centric solutions to meet customers’ emerging demands. As insurance is seen as an extra burden in the country, insurance companies in Kenya need to adopt innovative approaches which would benefit customers of all income groups. As an example, inclusion of coverages for catastrophic events could attract more customers in flood prone Kenya.

 

Adoption of technology like big data and cybersecurity is crucial for insurance companies. This would allow companies to ensure secure services and provide an easy mode of access to customers. Moreover, introduction of analytics would encourage the development of personalized insurance solutions designed as per needs and expectations of the consumer. Lastly, collaboration between government, regulatory bodies and companies is imperative for the growth of this sector.