By Sashreka Pillay
Embryonic. One of the most striking words we've ever heard used to describe a region's insurance industry - but also one of the most appropriate for such a distinctive market.
KPMG’s 2nd Annual Insurance conference was an intensive convocation of thoughtful representatives from insurance companies, financial technology firms and indispensable peripheral supporting organisations. As an indication of the level of participant engagement and content quality throughout, there was still a "full house" at the close of the conference despite it being Friday afternoon with the beautiful Mombasa beach as a backdrop.
Given how unusual this is, we thought it best to share the top four themes which kept us in the boardroom and off the beach:
New vs. Old
Kenya has an insurance penetration of just 3% and that includes corporate firms who are mandated to purchase insurance. A key factor in the low penetration level is linked to the populations mastery and perception of insurance products - they are still quite esoteric to most. This sparked a great debate on which would be more effective: greater penetration of additional insurance products to the existing client base or an active hunt to expand the 3% with education reforms and extensive product education.
When looking at whether to expand the 3% penetration, the topic of creating an embedded insurance product for high value items naturally surfaced. It was followed quickly by a moral debate on whether the end customer needs to know, with certain products, if they are buying insurance or not. A good example here: If a farmer in a specific region purchases a bag of seeds with embedded insurance and the area in which his farm operates does not receive rain there is a high probability that his seeds did not germinate. In this model, the need to explain how insurance works and why he received the new bag of seeds, could arguably happen when he receives the new bag of seeds.
Increased and Risk-Based Capital
Regulation spurs creative thinking in the most advanced markets. It’s certainly doing that in Kenya. The move towards increased and risk-based capital has a deadline for 2018. Interestingly, feedback from the group discussion at the conference was that most insurers are not ready and that the date would most likely be pushed out. Most insurers felt that they were unprepared for the practicalities of this legislation and are finding it difficult to bridge the gap between current and desired operations.
A key theme through the conference was that digital innovation can help insurers in this region adapt to new regulations faster, reach a great penetration of the market and find new products for the region's unique needs. It was great to see that technology wasn’t positioned as a mythical holy grail but rather as practical and implementable solutions with lots of talk on what actually needs to be considered when implementing. Happy to report that blue sky talk was only about the beach.
Exploring this shortlist of relevant topics shows just a fragment of the investment of the time and resources KPMG East Africa has made to trigger development of the insurance industry. If you would like to understand more or help grow this embryonic market, feel free to reach out to me directly at