Report ranks Kenya high as potential market for insurers
Business
By
Lee Mwiti
| Feb 17, 2016
Kenya’s positive growth, rising consumer demand, population and new technology make it attractive for African insurance companies outside South Africa.
This was revealed in a report launched yesterday by consultancy firm Ernst & Young (EY). The report titled Waves of Change: Insurance opportunities in Sub-Saharan Africa compares insurance markets in seven countries namely Kenya, Malawi, Tanzania, Uganda, Nigeria, Zambia and Ghana.
The report shows Kenya recorded the highest insurance premiums as a percentage of Gross Domestic Product among the seven countries at 1.9 per cent. It also topped in terms of potential for increased life insurance sales at 35 per cent.
The country also held the first spot among the seven countries when it came to Insurance premiums paid per capita, recording $39 (Sh3,971). All this data was compiled in 2014.
READ MORE
Kenyan forex traders face dream and reality gap, experts say
Kenya calls for reforms and more say in global lending institutions
CA: Internet disruptions to continue
Company plan to set up cement factory now thrown into limbo
Tax proposals will claw back gains in climate change fight
Traders warn high levies will be a burden to hustlers
Kenya, Uganda to extend oil pipeline from Eldoret to Kampala
Hinga: Finance Bill proposals on affordable housing will make selling of units hard
Airtel wins Sh4 billion landmark case over distribution of phones
Insurers oppose proposed motor circulation tax in Finance Bill, 2024
In the same year, Kenya generated insurance premiums of $1.8 billion (Sh183.3 billion), the largest in Sub-Saharan Africa again outside South Africa.
Oxford Economics expects the Kenyan insurance market to grow to $2.2 billion (Sh224 billion) by 2018.
Non-life insurers dominate the Kenyan market and collect two-thirds of total premiums. Nearly half of non-life covers are generated from automotive insurance. Almost another quarter comes from health.
But still given the relative prosperity in Kenya, Insurance penetration remains small with the report citing fraud as a major concern. “A whole 95 per cent of respondents claim insurance fraud is what is keeping them from getting covers,” the report reads.
“Already the most mature among the seven countries in our survey, significant upside potential exists in Kenya,” says Steve Osei-Mensah, EY East and Central Africa Insurance and Actuarial Advisory leader.
“During the first quarter of 2015, premiums grew by 16.4 per cent, according to the Insurance Regulatory Authority. And for all of 2014, gross direct premiums grew at more than 20 per cent,” Mr Osei-Mensah added.
Kenya has also been a leader in developing its M-PESA mobile money platform. A number of insurers already employ it to fund basic insurance coverage, though some executives doubt it can ever replace the traditional system of using agents and brokers for higher-priced or more sophisticated covers.
- Airtel wins Sh4 billion landmark case over distribution of phones
- Hinga: Finance Bill proposals on affordable housing will make selling of units hard