New campaign to improve insurance penetration underway in Kenya

The intention is to increase the penetration of microinsurance in rural areas and among low income earners, farmers and micro-entrepreneurs to guard against common risks that can condemn them to absolute poverty, such as loss of property, accidents and hospitalisation. The new campaign is known as ‘Champions of MicroInsurance’, an initiative supported by African-focused reinsurer Continental Re. The campaign will be rolled out progressively across all 47 counties in Kenya, through the training of special cluster groups of comm-unity leaders, roadshows and educ-ative editorial in regional media. “This is a good initiative,” said Tom Gichuhi, Chief Executive Officer of the Association of Kenya Insurers (AKI).hideAs lead sponsor, Continental Re will continue to be associated with the initiative, which we trust will go a long way in accelerating the uptake of micro insurance products at grass root levels,” said Continental Re’s CEO Calisto Ogaye. Other sponsors are CIC Insurance, UAP Insurance, APA Insurance and Majani Insurance Brokers. Insurance Regulatory Authority (IRA) experts offered the training, while the Kirinyaga Star newspaper facilitated the campaign activities. The intention is to ensure that more Kenyans are covered by insurance, with this particular initiative targeting the low income market to ensure that they are not caught up in the cycle of poverty once calamity strikes. Microinsurance is one of the fastest growing classes of insurance, although no scientific data has been generated yet to offer the scale of growth. But some of the largest insurance companies in Kenya have started microinsurance departments, hoping to tap into the mass market. Kenya’s insurance penetration is still low at 3.5%, with much of it being statutory insurance sales. But a growing middle class, innovation for tailored products, the growth of microinsurance and aggressive marketing are expected to accelerate penetration in the next five years. AKI estimates that penetration will grow to 6.5% in the next five years and gross written premiums will increase from Ksh130bn in 2013 to Ksh200bn in 2018. “Kenya’s growth of the oil and gas sector, the building of the railway, roads, the LAPPSET project, the real estate sector, the growing of the middle class; all these sectors will need insurance… [and] insurance companies are gearing up for that,” said Mr Gichuhi. The insurance sector in Kenya is still slow in tapping the mass market, unlike the commercial banks that have seen successes in agency banking, and telecommunications companies like Safaricom through its Mpesa mobile money transfer and a banking application known as Mshwari. The growth of microinsurance has prompted the IRA to release the draft Kenya Microinsurance Policy Paper, which will form the basis of regulation in the sector. Among the policy paper’s recommendations are that compensation should not take more than 10 days once the claimant provides the relevant documents. Compensation for funeral claims should be done within 48 hours. It recommends that the minimum capital for microinsurance companies should be Ksh50m. Savings and credit societies will be allowed to own microinsurance companies, as well as licensed aggregators. It also recommends the setting up of a microinsurance compensation fund. As Stephen Wandera, Director, Insurance Business, at east African insurer Britam, told Commercial Risk Africa, microinsurance is a crucial part of the jigsaw in encouraging people to buy insurance and build up their wealth, thanks to the security of knowing claims will be paid. Mr Wandera said Britam was hoping to make a couple of major breakthroughs in this area in the next year or two. “The right partnerships are essential for microinsurance to work,” he said. Mr Wandera added that it was important not to be afraid of making significant changes as the products are rolled out. He pointed to one such product, launched as a microinsurance product but which the firm is now withdrawing from the market. “What we discovered is that this product was being bought by SMEs rather than the subsistence level we thought we had aimed at. So we have withdrawn it from the market and will be relaunching it this year as an SME product.” Mr Wandera added: “We discovered these SMEs couldn’t find an affordable product and had turned to microinsurance-level policies. So now we are adapting it to suit them and to bring it into the corporate world.”

New campaign to improve insurance penetration underway in Kenya

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