Insurers bid for youth market with savings products
From left: Pan Africa Life CEO Tom Gitogo, AKI executive director Tom Gichuhi, Kepsa chairman Vimal Shah and AKI chairman Mark Obuya in Nairobi. Photo/Salaton Njau
What you need to know:
Penetration of life insurance stands at one per cent in Kenya compared to 13 per cent in South Africa.
The penetration of general insurance is 3.16 per cent in Kenya compared to more than five per cent in Morocco, Mauritius and South Africa.
Insurers are targeting the youth to deepen penetration of life underwriting business in Kenya.
The Association of Kenya Insurers (AKI) chairman Mark Obuya said lack of social and economic protection exposes the youth to poverty and an uncertain future.
“We want to be part of the solutions to problems affecting the youth and there is no better way to do that than to enhance financial inclusion,” Mr Obuya said.
The moves follows a market survey that showed that lack of information, high premiums and limited product range made covers less attractive to the youth.
The survey also showed that while young consumers associated insurance with peace of mind, they did not consider it an immediate need and wanted products that would help them save for immediate goals.
Penetration of life insurance stands at one per cent in Kenya compared to 13 per cent in South Africa. The penetration of general insurance is 3.16 per cent in Kenya compared to more than five per cent in Morocco, Mauritius and South Africa.
Bidco chief executive officer Vimal Shah said insurers should use mobile phone services to market and sell their products, the same way that banks are using the services to ease outreach.
The East Africa Community market of 130 million people and $95 billion (Sh8.17 trillion) presents a growth opportunity for underwriters, Mr Shah said. Some underwriters have already used the mobile phone or the Internet to roll out various products and services.
Last August, Heritage Insurance launched its “Blue” medical product which allows clients to access information on their benefits and claims online.
Mr Shah said insurers should also consider going the way of underwriters in advanced countries that have capacity to price any risk.
“In Kenya, insurers do not play a major role in financing business. We have mainly asset-based financing as we do not have much of loans backed by insurance,” said Mr Shah.
The Bidco chief executive said banks were sitting on a lot of cash, because they were looking only for clients who have tangible assets as collateral instead of exploiting the role of insurers.
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