Digital Solutions Answer to Untapped Insurance Market

How does the largely untapped insurance market in Kenya benefit from technological innovations? The answer lies in tapping into the growing and remarkable digital solutions being conjured up by innovative startups.

Kenya’s insurance story mirrors that of any other sub-Saharan country (apart from South Africa and Morocco) – low penetration rate. This affects the most vulnerable in the society, the low-income households.

At 3% of the country’s GDP, insurance rate remains unremarkably low in Kenya. The largely uninsured are low-income earners, who are often crippled financially in case of a disease, accidents or weather-castigated poor harvest.

In Deloitte’s Unlocking new markets; Digital innovation in Africa’s insurance industry, while middle class consumers tend to reduce financial vulnerability by means of insurance, the ‘bottom-of-the-pyramid’ consumers often do not have access to or cannot afford insurance products.

What then? This is when technology and innovation meets underwriting. The word coined from the convenient marriage is insurtech. Roughly put, it is the digitization of insurance process to advance efficiency and cost-reduction.

How can insurtech bridge the uninsured gap and enable financial inclusion, especially to the low-income earner, comprising 74% of waged employees in Kenya according to a report by Institute of Economic Affairs?

First, cost. This is a necessary ingredient in the insurance sector; from premium underwriting to offsetting a claim. Maintaining low costs in mass insurance remains a key challenge. By adopting strategies employed by insurtechs, insurers will improve their business processes thereby cutting costs and increase customer satisfaction. This, in the end, brings down the cost of a policy, giving the uninsured opportunity to be covered.

In a research by The Centre for Financial Regulation and Inclusion (Cenfri), Swiss Re Foundation, Munich Re Foundation and United Nations Office for Disaster Risk Reduction, there is positive socio-economic impact of affordable insurance products.

Secondly, let us explore data. As is often told, Data is King

The insurance industry is rich in data. That cannot be gainsaid. Still, we need new data and analytics to allow new customer insights. This is because consumer needs and behaviour patterns keep on changing. 

At WazInsure, we provide data-driven insurance solutions to make the insurance value chain not only transparent but also ultimately cheap and cost effective for all insurance stakeholders, improving on workflow effectiveness, cost savings and customer satisfaction.

By leveraging on technology, insurance firms can penetrate a wider reach faster and efficiently at a click of a button. According to Communications Authority of Kenya’s 2018/2019 Q1 sector statistics report, the country’s mobile phone penetration crested the 100% mark. This means, on the surface, that everyone is connected to a mobile phone.

The high mobile penetration has been further boosted by tremendous growth of mobile-based transactions. More than 90% of Kenyans have mobile phones while those who have access to internet services are estimated at 84%.

A research by PricewaterhouseCoopers (PwC) says data consumption in Kenya is expected to grow by 41.1% to reach 984 Million Gigabytes in 2022.

By leveraging on the high mobile phone accessibility by Kenyan consumers, and taking into account the attraction of using mobile money platform to conduct financial transactions especially among the low-income earners, we have an opportunity to drive insurance penetration in the country.

Through the above approaches, WazInsure intends to play a crucial role in mitigating the negative effects of financial shocks and in doing so reducing financial vulnerability.

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