In recent years, we have seen the Kenyan economy face some serious challenges, most notably high inflation, growing cost of living pressures, and high public debt, all compounded by global economic uncertainty.
The insurance sector can play a pivotal role in Kenya’s economic recovery. In particular, financial lines insurance can provide the stability that businesses desire, developing economic resilience across numerous sectors.
Financial lines insurance protects businesses from financial losses. This includes covering the costs of legal action being taken against a business by third parties, cyber-attacks and commercial crimes such as fraud.
By transferring these types of risks to insurers, Kenyan businesses can allocate their resources more efficiently, knowing that they are protected from potentially severe financial losses. This stability enables them to focus on their core aims such as creating employment opportunities or investing in growth.
Start-ups, in particular, benefit from financial lines insurance coverage as it protects their founders from personal liability in the event of legal or business disputes.
It enhances investor confidence in the business by providing reassurance that investments are protected against unforeseen risks, meaning they are more inclined to allocate capital to these firms.
As Kenya’s economy becomes increasingly digitised, cybersecurity threats also pose significant challenges to businesses, individuals and the government.
Last year’s July cyber-attacks on government online services and other platforms including e-Citizen, Kenya Power and Kenya Railways demonstrated the severe impact these cyber-attacks can have.
Financial lines insurance products can help mitigate the impact of these breaches by providing coverage for expenses related to legal liabilities, regulatory fines and data recovery.
To ensure that these products play a role in providing stability to Kenyan businesses and the economy in 2024, awareness among Kenyan companies of these solutions must be maximised.
The Insurance Regulatory Authority (IRA) is focused on raising awareness of the products that financial lines insurance brokers can offer.
Through consumer education programmes, newspaper articles and infomercials, the organisation has sought to make the public aware of the importance of financial insurance products and the reasons why insurance cover is needed.
The writer is the CEO at MNK Re Kenya.
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