Kenyan insurance firms are eyeing products of below 12 months to address the needs of the young population as losses pile up and penetration stalls.
The Association of Kenya Insurers (AKI) chief executive, Mr Tom Gichuhi, says the market is increasingly tilting towards a population that wants insurance that is affordable, flexible and covering as less as two months.
“If we keep on insisting that our products must be annual and we are not able to come up with short-term covers that are reasonably priced, we will wake up as dinosaurs,” said Mr Gichuhi in Nairobi on Thursday.
Speaking at an event convened by ZEP-Re and CIO East Africa, Mr Gichuhi said the market should deepen collaboration with actuaries to help in pricing of innovative covers.
Insurance penetration has dipped to 2.43 per cent, the lowest in 15 years, while the combined profit for the 54 insurers in Kenya has shrunk to Sh3.54 billion — the lowest in 12 years.
This is despite the rising insurable risks in the economy, among them cyber safety.
The length of the covers has made it difficult for many young people to come on board, according to AIG Kenya managing director Catherine Igathe, who added that the average age of the industry’s customers is 40.
Ms Igathe said that while old people may want to buy insurance for houses and motor vehicles, many youth want to insure gadgets such as phones and laptops.
“Others are asking for motor vehicle covers for Friday evening to Sunday evening.
They say the rest of the days don’t have high risks because they are fully serving their employer and the car is parked at home,” she added.
Ordinarily, a vehicle worth Sh5 million, charged at the industry’s average rate of four per cent, will require about Sh200,000 to be paid upfront before the cover is granted.
This is expensive in an economy where 74 per cent of salaried Kenyans earn less than Sh50,000 a month.