NAIROBI, Kenya, Oct 25 – The Association of Kenya Insurers (AKI) says it may take up to three years for micro insurance to take root in the country.
AKI Chairman Steven Wandera said on Monday that while insurance firms had made great strides in developing insurance products for the low-end customers, they were yet to reach levels that could guarantee sustainability.
“I do not think there is any insurance firm that has broken into economies of scale with regard to the numbers of customers,” Mr Wandera told Capital Business.
Industry statistics indicate that only 6.8 percent of the Kenyan populace had purchased insurance products.
“The main challenge with regard to the need to insure at the bottom of the pyramid is insurance awareness. You can imagine that many in Nairobi don’t even utilise it (insurance products) so by the time we get to the rural area, there is a much bigger problem,” he explained.
Micro insurance is said to have the potential to help low-income families cover risks that affect their day-to-day lives at an affordable premium.
In Kenya, which is presently only second to South Africa in the provision of micro insurance in Africa, overall insurance penetration is still wanting due to low levels of awareness.
The AKI chairman said although this group is ‘financially challenged’ the question should be how can they afford to effectively manage their risks, through insurance.
He was however adamant that insurance companies needed to develop relevant products, at attractive pricing to have greater impact.
“You have to reach the people at the bottom of the pyramid in a way that is economical and makes sense. The product that someone is using in Nairobi may not be of relevance to someone on the ground or even the rural area,” Mr Wandera said.