Nairobi — Earlier this month, the Insurance Institute of Kenya, IIK, the umbrella body for insurance professionals in Kenya held its 40th annual conference with the theme on Reimagining Insurance; Professional Innovation and Intelligent Risk in a Fast-Changing World.
The conference drew participation from industry players operating across the region, sharing insightful thoughts into how the sector can work to improve on customer experience, trust and innovation to drive growth.
Conference participants also shared insights on the future of Africa's insurance sector in the wake of region-wide integration efforts including the Africa Continental Free Trade Area, AfCFTA and the East African Community, EAC, exploring the opportunities that these initiatives present.
As one of the players, Absa Life Assurance Kenya led a discussion on findings from a study looking into Customer Obsession in the Digital Age. One of the key takeaways was that while technology continues to drive convenience, trust and loyalty remain harder to earn and far more valuable once achieved.
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This is more apparent in bancassurance, a nascent sphere of Kenya's insurance sector but one that has displayed significant potential in growing both insurance access and profit margins for the various players involved.
According to the latest State of the Bancassurance Market in Kenya report from the Association of Kenya Insurers, AKI, bancassurance has experienced remarkable growth in recent years, with premiums soaring by 79.4% between 2019 and 2023, significantly outpacing the overall insurance industry's growth of 56.2% recorded during the same period.
At the same time, the life insurance segment of bancassurance is reported to have outpaced non-life insurance, achieving an 88.6% growth in gross premiums, highlighting an equally dynamic expansion.
Alongside the success stories however, some challenges still abound. While bancassurance has experienced strong growth, it is now facing emerging profitability pressures. Claims have surged from Sh6.5 billion in 2019 to Sh14.1 billion in 2023, in step with the rapid increase in premiums.
These numbers point to the significant role that commercial banks play in serving as crucial intermediaries, delivering innovative products through distribution channels between insurers and agents and their customers.
Founded in 2015 Absa Life Assurance was the first to fully adopt a bancassurance model of distribution, with an aggressive product diversification and digital-first solutions that has seen assets under management rise from Sh 500 million in 2015 to Sh 8 billion in 2044.
Absa Life has also grown and strengthened its corporate offering with customizable solutions for both large companies and Small and Medium Enterprises,SMEs, reining in a sector that has for a long time largely been neglected by service providers.
For a firm only a decade old, this progress casts the spotlight on the potential inherent in widely scaling up bancassurance and related partnerships in the sector. Currently, Absa Life Assurance is processing Sh800ml in maturities and this figure is set to grow bigger.
As the industry grows from strength to strength the role of commercial banks in developing and rolling out new and innovative distribution channels for the sector will only be more crucial.
The growing use of artificial intelligence to deliver consumer products at both the front and back end demands a re-think into the development of customer engaging solutions that foster trust and cost less than the current overheads.
These savings in operating expenses, convenience and hardware infrastructure could, in the medium to long term, significantly boost companies' bottom lines and accelerate insurance adoption at the last mile.
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There is also a need for deeper engagements between the private and public sectors into developing robust universal healthcare systems that cut operational costs for healthcare institutions and workers and broadens inclusion for all Kenyans, particularly those in rural areas.
The inevitable centralisation of these nation-wide healthcare systems such as immunization drives and pandemic responses will require strong digital frameworks that are scalable, adaptable and interoperable.
At the same time the need to maintain strong data privacy systems and minimise friction across the various consumer touchpoints will demand timely and innovative responses from industry players.
As the Association of Insurance Brokers of Kenya, AIBK prepares to host its 19th annual regional conference early next month under the theme "The future of Insurance: Igniting Innovation, Securing Tomorrow, it is important that some of the solutions to these questions stay on the agenda, as they are likely to remain pertinent if we are to expand insurance coverage to more Kenyans.
