The insurance sector in Kenya has had its fair share of wins and losses in the recent years. Due to the harsh economic times rocked by two elections, low insurance penetration and insurance fraud, this sector has been dealt its hardest blow yet.
The industry as a whole experienced an underwriting loss of Ksh1.65 billion in 2018. Making it the biggest loss experienced in the past 10 years with the total profit after tax down from Ksh11.05 billion to Ksh6.82 billion in 2018 as both claims and management expenses increased across the board.
The regulatory changes made in 2016 resulted in the increase of costs for some insurance companies. This may have directly resulted to increased capital injection into insurers especially those that were moving into the general insurance space. The sector has also been heavily affected by fraud, which is a common problem all insurers face.
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Fraud has shown its face in different shapes and form. Some examples include fake insurance agents who sell nonexistent covers to unsuspecting clients. Only when disaster strikes do the victims find out that they have been scammed.
In terms of motor insurance, we have seen people producing fake valuations reports seeking to receive large compensation amounts. We have also had incidents of clients signed up to home insurance faking burglaries of their own homes in a bid to try attain money to cure financial instability.
“In 2018 we received claims of over 3 billion shillings, 82% of which were paid off. Amongst this sum, 3% were declined mostly due to fraud. It is therefore important for all insurance companies to conduct thorough and time bound investigations in order to identify the credible claims from the Fraudulent ones,” says Resolution Insurance CEO Peter Nduati.
All is not lost for the insurance industry. Things can be turned around through product innovation and strategies that focus on automation and analytics that will improve customer experiences, strengthen and create new partnerships, improve county business and alternative distribution while reducing management expense. Before this, it is extremely important to implement educational campaigns within the country to help demystify and breakdown the role and importance of insurance as a critical part of life so as to encourage and initiate trial and uptake of more insurance products.
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Product innovation is another key factor in the industry. Insurers should work harder to come up with more innovative and customer centric products. It is their task to research on what customers need when it comes to insurance. Product innovation will not only help drive sales but also increase insurance penetration in the nation.
It is also key to identify, understand and implement growth strategies within the insurance industry that will help insurers succeed and increase their premiums. “We came up with a county strategy that has proven very successful since implementation as our business no longer focuses on Nairobi alone. This has boosted our medical and general business premiums especially in the coastal and western regions,” says Mr Nduati.
Creative and practical strategies will help more insurance companies improve profitability and better manage expenses.
This also promotes healthy competition within the industry, thus giving insurance clients a wide variety of insurance solutions to purchase and it brings healthy competition amongst insurers. Besides, it gives clients and potential customers a variety of solutions and education that will help them make informed decisions.
There is major potential for the insurance industry and for individual companies to grow and reach new heights. Insurers have a crucial role which is to help clients protect what they value most. With more innovative solutions that focus on customer’s value proposition insurance companies will be able to provide the best possible products for different target audiences.
Insurers should constantly be on the lookout for partnership opportunities across the board to help diversify and appeal to a larger target. Insurance is here to stay and the industry’s prospects are positive.
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