Kenya's insurance industry has made huge losses in recent years. Companies need to find ways to offset risk without making products unaffordable and to deliver more innovative products.
Africa's insurance market has long been earmarked as a sector with enormous potential, amid excitable predictions of a lucrative future driven by an emerging middle class.
Yet as it stands, the industry accounts for just under 1.2% of insurance premiums written globally. According to a 2018 PwC report "the insurance market in Africa has barely moved since 2008 ... in fact the rate of premium growth in USD terms has slowed down".
In Kenya, the industry has made huge losses in recent years. Underwriters have suffered due to rising levels of insurance fraud and relatively low levels of customer familiarity with financial products. At the same time, some experts argue that insurance companies fail to correctly price and market their products and misunderstand their prospective customers.
The Kenyan market is perhaps one of Africa's most promising. Penetration is still low, estimated at just 3% by KPMG, which surprisingly puts the market at fourth on the continent behind South Africa, Morocco and Egypt. But Kenya's insurance infrastructure is relatively well developed, boasting around 50 companies, many with long track records in the country. An active and effective regulator, the Insurance Regulator Authority (IRA), oversees the market. In addition, the country has a fast-growing economy, a booming population and a mobile money revolution that facilitates transactions even in remote areas.
According to the Association of Kenyan Insurers, Kenya represents 70% of the East African insurance market. International and regional insurers see the country as a hub to establish a presence and then expand into large neighbouring markets.
"Kenya, in particular, is a huge market with very high potential," says Demba Sy, CEO of Allianz Kenya, a subsidiary of the German giant, which entered the market in 2016.
Other companies have a long history in the market via mergers and acquisitions, including Sanlam, South Africa's largest insurance provider. Kenyan domestic provider Jubilee Insurance has been based in Nairobi since 1937 and now operates as one of region's largest insurers.
Missing the mark
But despite the strong corporate presence, many are left scratching their heads as to why the industry has yet to expand as rapidly as expected. By the end of Q2 in...