The uptake of micro-insurance products in Kenya has seen a significant increase in recent years, particularly in the areas of health and farming coverage. Despite a low insurance penetration rate of below three percent in the country, the number of micro-insurance products has risen from 32 in 2015 to 55 in 2022. The growth in micro-insurance underwriters has also been notable, with the number increasing from 11 in 2015 to 18 in 2022, indicating a positive outlook for the industry.
According to a survey conducted by the Association of Kenya Insurers (AKI), the rise in health and life insurance covers can be attributed to the emotional significance of these types of insurance. When individuals are faced with illness or medical emergencies, having their medical bills covered provides them with a sense of security and relief. These emotional factors have contributed to the increased demand for health and life insurance products.
However, the micro-insurance sector faces several challenges that need to be addressed for sustainable growth. These challenges include inconsistency in premium payments, the perception that insurance cover is expensive, competition from competitors who undercut prices, minimal innovation, and high claims. Overcoming these hurdles will require the industry to focus on making micro-insurance products more relevant and appealing to the target market.
Micro-insurance products are designed to provide coverage to low-income households and individuals with limited savings. These products offer compensation for illness, injury, death, and protection for low-value assets. Examples of micro-insurance products include crop insurance, livestock insurance, theft or fire insurance, health insurance, death insurance, disability insurance, and coverage for natural disasters. The availability of these products can help mitigate the risks faced by vulnerable populations while also contributing to the overall economic development of the country.
Insurance experts emphasize the importance of government involvement in unlocking the growth potential of micro-insurance. This can be achieved through partnerships with private sector organizations, investment in data and research, and providing education and incentives for small-sized businesses to obtain insurance coverage. Small and medium-sized enterprises (SMEs) play a significant role in the economy but are often exposed to high risks, leading to substantial losses. By securing insurance coverage, SMEs can enhance the resilience and continuity of their operations, benefiting both their businesses and the wider economy.
In conclusion, the rise in micro-insurance products in Kenya, particularly in the areas of health and farming coverage, reflects the increasing recognition of the importance of insurance for low-income households and individuals with limited savings. Despite challenges such as inconsistent premium payments and competition, the micro-insurance sector has shown potential for growth. Government support, partnerships, and education can further enhance the growth and relevance of micro-insurance in Kenya, benefiting both vulnerable populations and the overall economy.
