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Kenya Insurance Report Q3 2011
Business Monitor International, June 2011, Pages: 44
Business Monitor International's Kenya Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kenya's insurance industry.
- The overall insurance sector remains fairly resilient but is very sensitive to changes in regulations that affect companies’ ability to adapt products to their operating environment.
- Published results in relation to calendar 2010 have generally been good.
- The main opportunities are in the further development of micro-insurance products.
- The industry is fairly fragmented and there may well be further consolidation.
- By the end of the forecast period, Kenya’s insurance sector will remain underdeveloped by most metrics but will also continue to grow ahead of much of the rest of Africa.
Despite doubtful stability in the country’s politics, improving economic conditions have helped Kenya’s insurance industry to rebound from its low point in 2008 and grow. The sector is fairly fragmented and focused on local players. The foreign insurers that do operate in Kenya have a high tolerance of emerging market risks and low exposure to the volatility of capital markets in the wake of the global financial crisis.
A new development in early 2011 has been the launch of shari’a-compliant insurance products by Takaful Insurance of Africa (which is partially owned by CIC). The company plans to make the products accessible to as much of the Kenyan population as possible, particularly small and medium-sized businesses.
The industry struggles with two significant challenges. The first is the lack of knowledge about insurance. Companies in the marketplace have taken the strong economic growth as an opportunity to expand regionally, opening local offices to try to increase the level of insurance knowledge in the general public. The second challenge is price. All the major players are involved, to varying degrees, in the development of micro-insurance products that aim to get people covered at a price they can afford to keep paying.
A change in regulation has forced the separation of life and non-life products and restricted the growth of the life insurance sector through micro-insurance. The life sector is unlikely to see much growth over the next few years without regulatory intervention. At the moment, life insurance does not represent a major vehicle for long-term savings by Kenyan households.
The non-life segment appears to have been more resilient in the face of economic and political turmoil. We have seen lots of new products launched, most of which are particularly tied in to the micro-insurance segment. It is not as vulnerable to changes in the political and economic conditions in the country and we expect to see this sector grow and grow, even if it takes time to do so.
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