Data from Insurance Regulatory Authority (IRA) shows a total of Sh444 million was reported under micro-insurance class of business in September compared to Sh202.54 million collected by the end of last year.
Micro-insurance aims at enabling low-income earners manage risks such as accident, illness, theft, death, fire and natural disasters.
Insurance penetration has been on a rise in the country up to 3.44 per cent last year from 3.16 per cent in 2012.
Insurance premiums collected from low-income earners in the nine months to September have surpassed full-year 2013 underscoring importance of the bottom of the pyramid.
Data from Insurance Regulatory Authority (IRA) shows a total of Sh444 million was reported under micro-insurance class of business in September compared to Sh202.54 million collected by the end of last year.
“This two fold growth is indicative of increasing uptake of micro-insurance products in the market,” said IRA.
Micro-insurance aims at enabling low-income earners manage risks such as accident, illness, theft, death, fire and natural disasters.
It works better with groups compared to individuals because of the higher cost of selling to individuals. It is also cheaper to underwrite group risks than individual risks.
Some of the products offered under the class include Afya Bora by CIC, Salama Sure by UAP and Faulu Afya by Faulu Kenya.
The total premium collected by insurance companies rose by 20 per cent to Sh119.6 billion from Sh99.4 billion in September last year. IRA attributed the growth to increased awareness, new products and new distribution channels.
Life business recorded a faster a growth of 27.4 per cent to Sh41 billion than general insurance’s 17 per cent to Sh78.7 billion. The growth is faster than that recorded last year when the life business grew by 16.6 per cent and the general by 20.2.
Insurance penetration has been on a rise in the country up to 3.44 per cent last year from 3.16 per cent in 2012.
Medical insurance has been the key driver of the uptake as households looked to cushion themselves from the rising cost of healthcare.
As per September, medical premiums constituted a quarter of all cash collected by insurers. Kenyans contributed Sh20 billion towards medical cover compared to Sh27 billion to motor vehicle insurance. Medical cover is not compulsory unlike motor vehicle insurance.
Under the motor business, Sh12.3 billion was to cover private motorists while Sh14.7 billion was from commercial motor vehicles.
Recent spate of insecurity in the country has also made small micro-enterprises aware of the need to insure their businesses. A growing middle class searching for social security has also contributed to the growth along with the recent discovery of oil.
Other major classes of business include fire industry, Sh7.6 billion, workers compensation at Sh4.3 billion and theft at Sh3 billion.
The growth of insurance business has not escaped the eye of international investors who are now moving into the sector.
Insurance and investment groups that have recently acquired stakes in existing companies in the market include Metropolitan International Holdings, Prudential PLC, Pan Africa Insurance Holdings Ltd and LeapFrog II Holdings Ltd.
IRA is currently developing a micro-insurance framework to provide an operation and supervision guidance to ensure growth.
Financial players have been improving systems to reach those at the bottom of the pyramid for long locked out.
Retirement Benefits Authority has the ‘mbao’ pension scheme which allows an individual to save a minimum of Sh20 daily for oldage.
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