InsurTech a game changer in Kenya’s insurance sector

As Kenya’s insurance sector struggles, market players are beginning to realise the benefit of adopting technology to reconnect with its customers after a period of increasing alienation and disengagement.

The sector is changing rapidly. Long gone are the days when insurers would rely on goodwill and single-channel sales strategy to increase product uptake.

Due to tech advancements, consumers expect more from insurers. The biggest worry in the insurance market is how some underwriters are yet to fathom the impact of technology on their businesses.

While digital distribution platforms have achieved limited market penetration, industry research suggests that up to 25 per cent of total small business insurance premium could be digitally underwritten by 2020 — a hypothesis supported by demographic trends and changing small business owner behaviours.

This is according to the first quarter InsurTech briefing of this year that aims to help organisations navigate the changing industry and to disrupt rather than be disrupted. “Arguably, insurers who stick too long with the old model will fade as premiums and their balance sheets shrink.

“Those who thrive will learn to ride the wave of disruption to capture new opportunities – although whether they will still be known as insurance companies remains to be seen; they might have to reinvent themselves entirely,” says the quarterly briefing.

In its global FinTech survey released in June last year, PwC noted three in four insurers believe that part of their business is at risk of disruption. The ‘Opportunities await: How InsurTech is reshaping insurance’ research also noted that almost a third of insurers do not deal with financial technologies at all.

In another survey through its global consulting arm Strategy& dubbed ‘Life Insurance in the Digital Age: The Omnichannel Revolution’, PwC urges market players to adapt to technology as it “has brought easy access to data, offering opportunities to vastly improve the overall customer experience and enabling (life) insurers to explore new revenue streams outside their traditional business models”.

In fact, the top brass in major insurers globally is wary of the next three years than they were 50 years ago due to what many perceive as possible ‘disruptors’.

Kenya, a prime destination with immense technological opportunities hence the moniker Silicon Savannah, continue to astound its peers with cut-throat innovations.

InsurTechs, known to come up with ‘ecosystem-oriented innovative products’, will address the lack of insurance uptake in the country through partnerships with known aggregators who are in touch with the mass market.

There are bottlenecks that hinder the growth of InsurTechs, mainly regulatory and a lack of capital.

Thus, a partnership with a backer who brings in capital, regulatory fit and a recognised brand would be transformational for the sector.