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Why innovation is key in the growth of the insurance industry in Kenya

Mar 12 – Innovation continues to be the only way for traditional insurers to stay relevant in the ever-evolving consumer market.

It offers insurers an opportunity to reinvent themselves and stay ahead of the pack even as new and well-funded technology-based start-ups continue to pose a real threat to the survival of the industry giants.

While innovation alone will not guarantee the sustainability of insurers, it holds the largest share of responsibility towards this end.

Already we have begun seeing change in that direction with some of the insurance companies in Kenya and South Africa adopting digital changes to serve their clients better.

Thanks to the proliferation of smartphones and other software development tools in Africa, we are already seeing the emergence of innovative digital platforms that offer users and potential client’s better information and transparency where important data is concerned.

Most of the digital platforms are operated by relatively new market entrants as other experienced companies continue to upload most of their data on these platforms with impressive results.

Insurance companies that leverage on some of the technological advances to create bespoke products for their customers will continue to thrive in this trendy industry while those that refuse to change with times will play catch up.

Technology has unearthed numerous opportunities that are not only exciting to consumers but also convenient as far as adoption and servicing is concerned.


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Data technology has in the recent past transformed risk which is the primary element of the insurance business model. Technology has changed the way data is created, captured, analyzed and stored.

Today, insurance firms have numerous sources from where they can collect data and help create important and personalized products for clients hence helping them in the management of risk.

International Data Corporation estimates that the digital universe will double in size every two years. This will create a large pool of data attributes from which insurance companies can acquire meaningful data that will advise their decisions in product designs, risk management, fraud reduction and offering of tailored premiums.

We also see that a myriad of breakthrough technologies in this industry are set to spur significant growth and transformation and players must change with the tide or prepare to close shop.

These include Internet of Things, Telematics, Digital platforms, Blockchain technology, Artificial Intelligence and Cloud Computing. These technologies are not only set to trigger the development of new insurance products but are also expected to change service provision and modify business models altogether.

The Internet of Things (IoT) is the perfect example of how new, better and current data will help define the insurance industry’s transformation. This data will inform the underwriting policies and risk management procedures that will help reduce the cost of offering insurance both in the short and long term.

IoT is a network of interconnected devices or nodes that collect and share data over the internet. Some of these devices may include but are not limited to the phones, home security sensors, wearable monitors and so on.

Motor insurance continues to be a major driving factor and an important contributor to the Gross Written Premium (GWP) for insurance companies across Africa.

In Kenya, for instance, it is against the law to drive a vehicle without motor insurance. While this does not apply in all countries in Africa, this is an area that is set to be transformed by innovation especially using connected devices.

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Telematics can help transmit important and valuable data that can be leveraged to get a complete user profile of an insured.

Through this data, insurance companies can then assess the risk profile of a potential client in addition to all other details and help customize a plan for the client. Insurers will be able to monitor the driving patterns and behavior of the client in real time such as the speed, the time of day that the client drives and much more.

Artificial Intelligence (AI) has enabled computer software to exhibit human-like behaviors that include planning, learning and solving problems.

AI has also enabled these computers to solve problems and make decisions after analyzing information. This technology has developed over the years and is now able to offer more advanced characteristics such as image recognition, voice recognition and so much more.

It is expected that AI will replace many human functions in the coming decade. Insurance companies stand to benefit a great deal by tapping into this technology.

Companies such as Jubilee Insurance in Kenya have already taken advantage of AI capabilities. Through their Digital Virtual Assistant named Julie, clients who interact with the company’s Facebook Page and website, receive real-time services that include end-to-end purchase of insurance products without any human intervention.

By 2020, it is estimated that there will be more than 20 billion devices connected to the internet. Insurance companies that will strategically position themselves for this transformation will reap big in the home, health and car insurance sectors.

Elias Kokonya, Senior Business Analyst – Jubilee Insurance

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