Promoting Insurance Penetration in Kenya.

Kiama Njonjo.

To increase the insurance penetration in Kenya, we may first want to know why the situation is the way it is;
Lack of insurance understanding:
Many Kenyans lack the knowledge about insurance products, their value and benefits. This is due to the complexity of insurance policies, how to acquire them, how they are paid in case of a claim, what happens when one fails to pay the premiums and also failure of insurance bodies to make available the information to the people.
This is a great concern in case we want to increase the insurance penetration in Kenya. As a remedy, educational programs about insurance are necessary to impart this know-how to the people. Roadshows and conferences would help to advertise the insurance products in a better way.
I understand there is a plan by the insurance regulatory authority of Kenya to introduce an educational program in all the 47 counties in Kenya. This is a good initiative and a great deal to help pass the information to every part of the country

There is a psychological lack of trust in the industry and its agents by the people:
This limits their involvement in insurance products. This calls for insurance bodies to uphold professional ethics and encouraged professionalism among the technical and field staff so as to gain the trust from the people. This could help change the insurance perception and its image in the Kenyan market.

Many people fear that they could be unable to service the premiums continuously thus making it expensive to them. The insurance bodies could come up with a different way of handling those who fail to pay premiums instead of terminating their cover in case of a term policy. This would encourage more people to buy the covers.
Many Kenyans are low income earners and live below the poverty level thus can’t afford basic needs like food, health, shelter and some cases even water. This makes them strive to try and acquire this basic needs hence regarding insurance covers as secondary needs for them. If the government could solve that problem then insurance covers could be given a priority by the majority of the people in the grass root level.
The industry requires incentives to lower cover prices to encourage the people to purchase insurance products. The Insurance Companies could also give more tax breaks on insurance premiums paid by the individuals and corporates. If they stimulate savings by offering more tax breaks on insurance premiums paid by individuals then it could help sell the insurance policies more easily.

Invest in micro insurance institutions.
Kenya is under-insured with penetration level of about 1% of the GDP. This signifies the necessity of having an insurance sector that could have a considerable potential to address the large remaining demand for insurance services by the large section of the population that is uncovered by insurance. This would add more to the development of the country therefore a huge potential for the insurance business in Kenya.
Investing in informal institutions like micro insurance institutions could help solve the limitation of formal insurance penetration. Since micro-insurance have the capacity to reach more people at the grass root, in rural areas, low income earners and micro-entrepreneurs to guard against common risk that can condemn them to absolute poverty such as loss of property, accidents and hospitalization.
Micro-insurance is able to reach more people in every part of the country and more precisely provide insurance products designed to target certain small groups of people in a certain regions where it’s located.

In conjunction with the plan by the Insurance Regulatory Authority to be implemented in all the 47 counties, where training of special cluster groups of community leaders, say, 100 people selected at random in every county and trained on insurance policies after which they are offered certificates of selling insurance policies. This is guaranteed to promote the insurance penetration if it goes through and well implemented by the government.

Foster a competitive environment which drives innovation and competitive pricing. In Kenya there is dominance in the market by a few large insurance companies which hinders competition from the other small companies that have no such a huge financial strength.
If the small companies are able to compete actively in the market then there would be an increased innovation where we would witness new insurance products coming out from every insurance company to ensure it grabs its market share.

Companies should have branches in every county to ensure there is easy accessibility of services by the customers. This would promote the growth of the economy at large, thus increasing gross premiums for the company hence increased total profit as well as ensuring insurance penetration.

Kiama Njonjo
Karatina University