The insurance product known as Nuru ya Jamii is the first policy targeting low income earners that combines property insurance and life assurance as a package.
The policy has three benefits, which include cover for household goods in the event of fire, family disability due to death and family life.
CIC Insurance Group CEO, Nelson Kuria, said the policy would spread insurance awareness and services to low income earners who have been locked out by conventional insurance products.
Speaking when he unveiled the new insurance policy in Kibera’s Kamukunji Grounds, Kuria said the policy will leverage on mobile money transfer service, M-Pesa, for payment of premiums and lapses once a claim has been paid.
“We are proud of being able to insure the a cross section of Kenyans in the informal sector including hawkers in the streets, jua kali workers in places like Kamukunji, mama mboga in Ukulima market and small traders in Gikomba market,” he said.
Low income earners have been largely ignored by insurance firms who lean on the middle-class with products characterised by high premium rates.
Kuria described micro insurance as insurance characterised by low premium and low caps or low coverage limits, sold as part of risk-pooling, and designed to service low-income people and small and medium businesses.
Though micro insurance is undoubtedly the new frontier for insurance growth all over the world and holds high potential for deepening the coverage of insurance services, pricing is not its only stumbling block in Kenya.
The industry still suffers a general lack of awareness on the benefits of insurance, a trend that the Association of Kenya Insurers is trying to reverse through public education campaigns.
A study by a South African consulting firm, Centre for Financial Regulation and Inclusion (Cenfri) in 2010 estimated that over 95 percent of the Kenyan population is not covered by any form of insurance.
Prior to Cenfri’s survey, another study had established that Africa has the lowest number of identified micro insurance lives covered—only 3.5 million, or just over 4 percent of the total number of people covered by micro insurance in the 100 poorest countries surveyed.
The research estimated that only about 1.6 million of these policyholders are living on less than Sh170 ($2) a day; which means that a huge population of the poor are generally excluded.