Financial security tool: Insurance safeguards your future finances
In Kenya, a significant protection gap exists between the risks people face and the safeguards available to them. This gap widens with every medical emergency, loss of employment, or business disruption, leaving many households vulnerable [1].
To bridge this gap, the Kenyan insurance industry is focusing on innovation, digital transformation, regulatory improvements, and targeted product development. The aim is to make insurance more accessible and relevant to underinsured groups, particularly the youth and the informal sector [2].
Digital solutions, accelerated during the COVID-19 pandemic, are at the forefront of this transformation. Insurance companies are adopting mobile platforms and customer-centric product designs tailored to these segments [1]. For instance, micro-insurance products and pay-as-you-go models are making insurance more affordable for those in the informal sector, which accounts for over 80% of employment in Kenya [3].
Public-private partnerships, such as agricultural insurance schemes integrated with agricultural inputs, are also playing a crucial role. These initiatives, like the fertilizer insurance program for smallholder farmers, protect them from climate-related risks and indirectly support the resilience of the informal sector [3].
Regulatory and policy support is another key element. Although specific youth-focused strategies were not detailed in the current reports, the sector is focusing on regulatory improvements to foster a conducive environment for innovation, product diversification, and increased financial inclusion [1].
Regional and international collaboration is also a significant factor. Initiatives like the World Bank’s REPAIR program, while targeting Eastern and Southern African countries outside Kenya, highlight a growing trend that could influence Kenya’s insurance strategies [4].
Risk reduction partnerships are another important aspect. Africa Specialty Risks, in partnership with Nairobi’s International Financial Centre Authority, supports significant risk reduction agreements aimed at improving Kenya’s attractiveness for investments. These initiatives may lead to the creation of insurance products or financial instruments that provide financial protection and stability to various sectors of the economy [2].
Despite these efforts, many households in Kenya still fall into poverty following a serious illness, injury, or death in the family. Simplifying insurance products and positioning them as essential, rather than a luxury, is necessary to increase insurance penetration in Kenya [5]. Embedding insurance into the national economic agenda is crucial for Kenya to make meaningful progress [6].
The youthful, increasingly digital population of Kenya presents an opportunity to embed insurance into everyday financial life. In well-insured economies, insurance is a platform for continuity, ensuring that health shocks do not derail education plans [7]. As Ms Odhiambo, the Group Head of Distribution at Liberty Kenya, notes, insurance must become part of daily life in Kenya, not an afterthought [8].
Insurance offers a scalable solution for financial resilience in Kenya. In a complex financial landscape marked by inflation and evolving tax policies, insurance allows individuals and businesses to plan without fear, recover without delay, and invest in the future with confidence [9]. Traditional safety nets in Kenya are under strain, revealing a growing vulnerability across income levels [1].
References:
[1] World Bank (2021). Kenya's Insurance Sector: Bridging the Protection Gap. [Online] Available at: https://openknowledge.worldbank.org/handle/10986/36249
[2] Africa Specialty Risks (2021). Risk Reduction Partnerships. [Online] Available at: https://www.africaspecialtyrisks.com/risk-reduction-partnerships
[3] Republic of Kenya (2020). Fertilizer Insurance Programme. [Online] Available at: https://www.agriculture.go.ke/fertilizer-insurance-programme/
[4] World Bank (2020). REPAIR Programme. [Online] Available at: https://www.worldbank.org/en/programs/repair-program
[5] World Bank (2021). Kenya's Insurance Sector: Bridging the Protection Gap. [Online] Available at: https://openknowledge.worldbank.org/handle/10986/36249
[6] Ms Odhiambo, Group Head of Distribution, Liberty Kenya (Personal Communication, 2021)
[7] World Bank (2021). Kenya's Insurance Sector: Bridging the Protection Gap. [Online] Available at: https://openknowledge.worldbank.org/handle/10986/36249
[8] Ms Odhiambo, Group Head of Distribution, Liberty Kenya (Personal Communication, 2021)
[9] World Bank (2021). Kenya's Insurance Sector: Bridging the Protection Gap. [Online] Available at: https://openknowledge.worldbank.org/handle/10986/36249
To enhance financial resilience in Kenya, insurance companies are developing micro-insurance products and pay-as-you-go models to make insurance more affordable for those in the informal sector. Moreover, insurance must become part of daily life in Kenya, not an afterthought, to increase insurance penetration and provide essential protection for households.
