Insurance firms move to tackle low sector uptake

By Morris Aron

Low uptake of insurance products in Kenya has been blamed on a general lack of a savings culture among Kenyans and low disposable incomes for the majority of the population.

In addition, negative public perception associated with delays in settlement of claims, high prevalence of fraud cases and the recent collapse of insurance firms.

Sammy Makove, chief executive officer of the Insurance Regulatory Authority said many Kenyans live below the poverty line – and as such cannot save.

“Close to 50 per cent of Kenyans live below the poverty line and inadequate tax incentives that could encourage the middle classes to purchase life insurance products,” said Makove. “In addition to this, a perceived credibility crisis of the industry in the eyes of the public particularly with regard to settlement of claims has also contributed to the low uptake of insurance products in the past.”

Statistics from Financial Inclusion In Kenya 2009 by the Central Bank of Kenya and Financial Sector Deepening Trust indicate that insurance services uptake between 2006 and 2009 stagnated.

The report indicates that only 6.8 per cent of Kenyans were using insurance services in 2009 compared to 5.8 percent in 2006. In addition, 1.1 percent and 1.5 per cent of Kenyans who previously had a policy of one type or another stopped using such services over similar period.

“Negative perception which has its origins as far back as the colonial times when insurance was selectively introduced to the commercial class and which is very hard to change is largely to blame for the slow pace of growth in the insurance industry,” said Isaac Ng’aru, insurance industry expert.

“Worse still, recent cases of fraud and delays in compensation has further complicated the issue for insurance firms.”

The statistics has seen insurance companies actively engage in marketing and education exercises in a bid to create awareness of products and services. CFC Life and Heritage yesterday launched a series of seminars in one such drives to educate potential customers.