Ideas & Debate

Insurers’ twin sins that keep penetration low


Last week, I started the story of Tom and Mary who returned from a short holiday to find their car parked in its usual position but the front was totally wrecked while their domestic manager Juma was missing in action.

The security guards filled in the blanks and it turned out that as soon as they had left, Juma had driven the car out of the house, managing to convince the guards at the gate that he had the authority to take the car for service. A shady story if ever there was one because the car apparently was being driven so erratically that even a five- year old child could tell that Juma had probably only ever sat on the driving seat of his unconsummated Formula 1 dreams.

After filing police reports and informing the insurance company of the theft by servant, Tom and Mary waited to see if their comprehensively insured vehicle would at the very least be repaired by their insurers but instead: Nada. Zip. Zilch. Zero. The insurance company said, and I am quoting verbatim the words of the claims manager before whom Tom and Mary sat, “You were careless in leaving your car keys in the kitchen. Even me when I go to shower I always go with my keys into the bathroom.”

In June 2012, the Insurance Regulatory Authority (IRA) undertook a national survey on enterprises' perception of insurance in Kenya. The report authored by Oino, Osiemo and Kuloba aimed to determine the perception of insurance within the small and medium enterprises business demographic. No prizes need to be given for what their nine-year-old findings were.

The highest awareness of an insurance product was motor vehicle insurance where 79 percent of the survey respondents were aware of the product followed by medical insurance at 76 percent and theft at 73 percent. There was a low level of awareness in marine, engineering, aviation, work men’s compensation, agricultural insurance and liability insurance.

I’m willing to bet that the only reason there is a high level of awareness for motor vehicle insurance is because it is a legal requirement to have insurance for any motor vehicle on Kenyan roads. The second highest awareness being medical insurance is obvious: get admitted into a Kenyan private hospital and begin to weep premium tears. Just like motor vehicle insurance, medical insurance is also an area with a significant level of insurance fraud particularly undertaken with the collusion of medical providers themselves.

So, I get it when the medical insurance providers are fairly cautious in giving the green light to the hospital when a client rocks up bleeding and writhing in pain from a ripped toenail. What I don’t get is when a medical insurance provider submits the lowest bid to an organisation, gets the business to insure all the staff and then within 10 months of cover being provided, refuses to pay the hospital bill of a patient who has just been admitted to hospital and been diagnosed with a debilitating malady that he had absolutely no clue about.

Over and above the trauma of having to deal with the unfortunate discovery, said patient has to deal with medical insurance that is being denied on the grounds that his malaise was a “pre-existing condition”. The only thing that was pre-existing in this situation is the reputation that the medical provider has in the market for being the lowest cost provider during public tenders for medical insurance providers and being the fastest denier of cover when a medical risk materialises.

The third highest-rated knowledge in insurance products was those related to theft. This would be a good time to confess that I am the “Mary” in the story. My late father was an insurance investigator and literally force-fed my siblings and I the mantra that “No car shall ever be driven nor household goods ever procured without insurance.” I bought into it. Then I ran up against the gobbledygook of exceptions to the rule of instances of theft where insurance won’t cover and we were left at the altar of shocked indignation by our insurer.

I don’t have the magic pill for what the solution is, as one reader who dropped me an email following last week’s piece asked. I just want to throw the issue back into the laps of insurance companies. If we don’t understand your products and we only hear and often experience the bad side of your service, well it’s no wonder that the national penetration continues to decline year on year to 2.34 percent as at 2019 numbers from a paltry high of 2.75 percent of the population in 2015.

It would be nothing short of pushing a boulder uphill in high heels to get those penetration numbers turning. Time to put on some Jimmy Choo peep-toes and get innovating.

[email protected] Twitter: @carolmusyoka