×
× Digital News Videos Weird News Health & Science Sunday Magazine Lifestyle Opinion Education Columns Moi Cabinets Arts & Culture Special Reports Fact Check E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Games Crosswords Sodoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS
×

Insurers cautioned against unfair pricing

By Fredrick Obura | August 20th 2020 at 16:49:40 GMT +0300

Zep-Re Chief Executive Officer Hope Murera

Players in the insurance sector have been urged to rethink their predatory pricing strategies as it is hampering the growth of the insurance sector, ZEP-RE Chief Executive Officer Hope Murera has said.

Murera said the industry had recorded a steady decline in underwriting revenues for the past five years, which is likely to be exacerbated by the Coronavirus pandemic.

“In Kenya, for instance, the industry recorded close to Sh3 billion in underwriting losses in 2019 as a result of the sector’s sluggish growth, low insurance penetration, and price undercutting among other factors. As a response to the declining underwriting revenues, most players have resorted to growing investment incomes as a safety-net. The situation is likely to worsen as a result of the negative impact of the COVID-19 pandemic, which has adversely affected key sectors of the economy - including the investment options,” Murera said.

Read More

She implored industry players to adapt to the use of technology in product development and distribution mechanisms which has become even more critical in these unprecedented times, adding that it would be counterproductive for any organisation to ignore technology in its overall growth plan.

“For instance, ZEP-RE has reinvented the operating model of ZEP-RE academy in response to the challenges posed by the pandemic to continue delivery of its training programs by adapting to online training solutions since April, 2020.

This innovation has increased the number of insurance professionals trained ten-fold, covering more countries at a fraction of the cost compared to the face-face training model which was being used pre-Covid 19,” Murera said.

From its research, McKinsey and Company observed that there have been increased adoption of technology by consumers in Kenya as a result of the pandemic and that most consumers in Kenya expect to increase the use of digital and mobile financial services even after the crisis ends.

“This means that digitisation for customers, processes, intermediaries, and employees is now more important than ever before,” said Clayton Hall, Engagement Manager at McKinsey and Company, based in South Africa.

Ms. Murera said the negative impact of COVID-19 in key economic sectors such as property, infrastructure development, tourism & hospitality, trade (export & import), and general business operation challenges were likely to affect the performance of the insurance sector adversely in the short term.

“Layoffs, infrastructure projects suspension, closures of hotels & lodges, slowdown in imports & exports, and reduced spending on insurance by organizations are already having negative effects on the prospects for our sector,” Murera said.  

In its analysis of the impact of the pandemic, McKinsey noted that the pandemic had already resulted in a slowdown in the overall economic growth in Kenya, South Africa, Nigeria, and Morocco (countries sampled), with the potential of a recession in some countries.

“The slowdown is acute in hard-hit sectors such as tourism. Also, many SMEs are under significant cost pressure, even facing the potential of closures and bankruptcies. There have also been lower productivities and job losses, particularly for the non-essential sectors. From our assessment about 150M jobs are at serious risk across the continent,” said Kartik Jayaram, a senior partner at McKinsey and Company based in Nairobi.


Zep-Re Insurance McKinsey and Company
Share this story

Read More

Feedback