How insurance sector can drive the Big Four agenda

An interesting question that has been posed, is as to how the insurance sector in Kenya can play a role in the development of the country and the Big 4 Agenda.

The focus sectors of the Big Four agenda are manufacturing, food security, universal health coverage and affordable housing. One may wonder what role insurance could play in achieving the agenda as well as in the development of Kenya and the continent in general. There are key actions insurance can play in each sector to strengthen its role in the economy and contribute to the general welfare of Kenyans.

The first step is for the insurance sector and companies to stop positioning themselves as being an option for ‘rich Africans’ to being a necessity required in a well-functioning economy. In the context of economic development of a young economy like Kenya, insurance has two important roles.

The first is as a stabilising presence that signals that certain business activities are deemed credible. The second role in this context is as a risk management strategy. If the private sector in Kenya and Africa at large seeks to position itself as a safe bet for investors, insurance plays a key role in risk management.

There is a need to manage risks linked to agriculture and climate change, risks associated with manufacturing in Africa, securing the health of a large and growing population and providing dignified housing for a significant portion of the population. Thus, in the African context, insurance is a risk management tool.

But there is a more innovative role that insurance can have in catalysing economic development in Africa and each of the Big Four sectors in specific.

In terms of manufacturing, a current pitfall is the lack of a comprehensive insurance package for manufacturers, and in terms of health, insurance is not deemed affordable by most Africans.

With regard to agriculture, insurance for small holder farmers who are the custodians of food security, is largely deemed to be uneconomical where payments made are not commensurate with losses incurred in the context of extreme weather conditions or pest damage, for example. And in terms of health insurance, that is deemed as a luxury for the rich in Africa.

But insurance can be a risk management tool by, for example, giving manufacturers an insurance bouquet that enables them to manage all their key risks at once.

Insurance, through micro-insurance can allow Kenyans and Africans to pay small amounts to secure their health and homes.

And for smallholder farmers, who are the true custodians of food security in Africa, insurance can play a key role in farmers recovering from unforeseen damages incurred from problematic weather or pests for example.

In short, the role of insurance in the Kenyan and African economy is undermined by under-appreciation of its risk mitigation qualities. Insurance is still seen as an option for ‘rich Africans’. This must change as insurance is a key element of a sustainable African economy rooted in secured long-term growth.