Insurance Regulatory Authority (IRA) CEO Sammy Makove said a three percent penetration reflects adverse effects of the economy as well as a weak saving culture among Kenyans.
“For emerging markets the benchmark is about 2.5 percent, but for the developed market it’s about six percent so we are still below the threshold for developed markets,” he said.
The IRA’s anticipated target for the insurance sector’s contribution to Kenya’s GDP is five percent in the next ten years.
Makove who was speaking at the opening of the annual Organisation of Eastern and Southern Africa Insurers (OESAI) conference, on Thursday, said the East African region is fairing much worse with only one percent penetration.
The OESAI annual conference drew 300 delegates from Eastern and Southern Africa to deliberate advancement in the insurance arena through the enhancement and diversification of insurance services.
Addressing the delegates, OESAI Chairperson Irene Muyenga said strengthening the insurance industry in the region will greatly depend on stronger efforts to integrate legal frameworks and harmonise educational programs.
“Legislation in the region has been a challenge. If a Zambian company wants to come into Kenya it has to relate to legislation that pertains to Kenya. There’s need for that harmonisation for us to bring this objective of regional integration in terms of bringing insurance business to fruition,” she said.
Prior to the formation of the OESAI, Africa’s insurance industry suffered the capital flight of insurance premiums to foreign companies, crippling growth in the market.
Since 1973 the OESAI – now with over 60 companies in its membership – has facilitated exchange of ideas on standardisation of underwriting practices in various markets and exchange of insurance and reinsurance business between member companies.
Venturing into investment and trade insurance, companies like the African Trade Insurance Agency (ATI) have opened the African market to more foreign investment.
Just recently, ATI signed an agreement with a German trade credit insurer to allow for more open account trading between the European country and African traders.
Assistant Minister for Planning and National Development and Vision 2030 Peter Kenneth reinforced the importance of trade insurance, urging OESAI members at the conference to take advantage of the pool of local resources available, to build capacity in the industry.
“The pool has been completely under-utilised. Africa business is about building capacities within Africa. The international community is now looking to Africa for business and looking at relocating to Africa because it is cheaper to operate from Africa. We must take advantage as insurers and re-insurers of that international trade,” he said.