The insurance market in Kenya is still largely undeveloped, and middle-class and lower-class consumers have a notably low uptake of it. This is due to a variety of complex factors that have their roots in historical, cultural, and economic circumstances.
Land, cattle, and other traditional investments have long been seen as the safest and most dependable ways to secure wealth.
In Kenyan culture, these kinds of investments are deeply ingrained and are frequently utilized for significant life events such as marriage, retirement, inheritance, and education. The societal tendency to value material possessions more highly than insurance has led to the misconception that insurance is a luxury that only the wealthy can afford.
But the great majority of Kenyans are left vulnerable to unanticipated threats because of their emphasis on material possessions.
For instance, a single medical catastrophe or natural tragedy can send many households into financial despair. With less than 3% of Kenya’s Gross Domestic Product (GDP) being insured as of 2023, the difference between those with and without insurance is significant.
This low penetration rate is a blatant sign that the financial security instrument that insurance can be, it is not being fully exploited. Therefore, the task is to change Kenyans’ perception of insurance from one of an optional expense to one of a crucial element of financial planning.
The Urgency for Change
Kenya’s financial scene is changing as it continues to modernize. The nation is rapidly becoming more urbanized, its middle class is expanding, and its access to technology is growing. These modifications offer a singular chance to reinterpret insurance’s place in Kenyans’ financial life.
The complexity of modern living is making traditional wealth protection strategies insufficient. For example, people who live in cities might not have as easy access to land or animals as they had in rural areas, thus insurance is a more sensible way to protect their possessions.
Furthermore, the emergence of worldwide threats like pandemics and climate change has highlighted how crucial it is to have strong financial safety nets.
Kenyans without insurance were particularly vulnerable during the COVID-19 pandemic, as many of them lost their jobs or struggled to pay for medical care.
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Because of this, it is now more important than ever to include insurance in standard financial planning.
Encouraging insurance to be seen as a wise investment rather than a heavy cost could help reduce these risks and give every Kenyan a more secure future.
The Role of Insurance Agents and Financial Advisors
When someone is thinking about getting insurance, they frequently start by contacting financial consultants, brokers, and insurance agents. As such, they are crucial in determining how the general public views and comprehends insurance products.
Regrettably, a large number of Kenyan agents lack the necessary tools to effectively explain to prospective customers the all-encompassing advantages of insurance. A major obstacle to boosting insurance penetration in the nation is the agents’ lack of comprehensive training and expertise.
The reliance of many agents on commission-based earnings can cause a shift towards prioritizing short-term sales rather than providing long-term client education and support.
Consequently, this approach often leads to clients buying inadequate or unsuitable coverage, resulting in dissatisfaction and a further decline in trust in the insurance industry.
Without a deep understanding of the various types of insurance available and how they can be tailored to individual needs, agents struggle to showcase the complete value of insurance to their clients, perpetuating low insurance uptake, especially among those who stand to benefit the most.
Reskilling, retooling and Training
Comprehensive training programs for insurance agents, brokers, and financial advisors are crucial to tackle these challenges. These programs should encompass not only the technical aspects of different insurance products but also the enhancement of agents’ communication and customer service skills. By doing so, agents will be better equipped to interact with clients, comprehend their unique requirements, and recommend appropriate insurance solutions.
Aside from formal training, it is important to promote ongoing professional development within the insurance industry. This can involve workshops, seminars, and certifications to ensure that agents stay abreast of the latest industry trends and regulatory changes. By providing agents with the essential skills and knowledge, the quality of advice and service offered to clients will improve, fostering greater trust and confidence in the insurance industry.
Another crucial facet of training should be emphasizing the ethical considerations in selling insurance. Agents should be trained to prioritize the best interests of their clients over their own financial incentives. This ethical approach will not only enhance client satisfaction but also contribute to the long-term sustainability of the insurance sector in Kenya.
Restoring Trust
Trust forms the foundation of any successful financial relationship, and the insurance industry in Kenya is no different. However, there is a significant trust gap between insurance companies and their clients, largely due to issues such as delayed claims processing, denied claims, and lack of transparent communication practices. These factors have led to widespread doubts about the reliability of insurance, particularly among individuals who have encountered negative experiences or have heard about others’ challenges.
Many Kenyans perceive insurance companies as entities more focused on collecting premiums than on providing timely and fair compensation, which acts as a major deterrent. This mistrust is further amplified by the often complex and jargon-filled language used in insurance policies, making it challenging for clients to comprehend their coverage and rights. The absence of clear, transparent communication only deepens the divide between insurance providers and the public.
To restore trust, insurance companies in Kenya must take proactive measures to enhance their operations and customer service. Transparency should be a key focus of these initiatives. Insurance companies need to ensure that their policies are articulated in clear, accessible language and that all terms and conditions are comprehensively explained to clients before they commit. This will enable clients to make informed decisions and reduce the likelihood of disputes arising from misunderstandings.
Improve Efficiency
Moreover, the claims process should be optimized and made more efficient. The lengthy and cumbersome claims process is one of the most significant sources of frustration for policyholders. Insurance companies should invest in technology and process enhancements to facilitate faster, more accurate claims processing. This could include using digital platforms that allow clients to submit and track claims online, thereby reducing the time and effort required to settle claims.
Improving customer service is a vital aspect of rebuilding trust. Insurance companies need to make client satisfaction a top priority by delivering fast, supportive, and empathetic service. This involves not only efficiently processing claims but also providing assistance and guidance throughout the entire policy duration. By establishing strong, positive connections with their clients, insurance companies can show their dedication to serving the best interests of Kenyans.
It is essential for insurance companies to participate in community outreach and educational programs to raise awareness about the advantages of insurance and eliminate common misunderstandings and myths. These efforts can narrow the knowledge gap and cultivate a more knowledgeable public that is better equipped to make wise financial decisions.
Way Forward
Looking ahead, the future of the insurance industry in Kenya relies on our ability to tackle the aforementioned challenges. By changing our perspective on insurance, investing in extensive training for agents, and reestablishing trust between insurance companies and their clients, we can develop a more resilient and all-encompassing financial system that benefits all Kenyans.
As we progress, it is crucial for all parties involved – government, insurance companies, financial advisors, and the public – to collaborate in promoting an insurance culture. The government can play a vital role by implementing policies that encourage the uptake of insurance, such as tax incentives or mandatory insurance for specific sectors.
On the other hand, insurance companies must pledge to enhance their practices and ensure that they are meeting the requirements of their clients.
For the public, the responsibility lies with individuals to take an active approach to financial planning and understand that insurance is not just an optional cost but a vital investment in their future. By making informed decisions and seeking dependable insurance products, Kenyans can shield themselves and their families from unforeseen risks and secure their financial well-being.
The insurance industry in Kenya calls for a fresh perspective – a change in mindset, enhanced training, and a renewed emphasis on trust and transparency. By embracing these transformations, we can ensure that more Kenyans have access to the financial protection they need, setting the stage for a brighter, more secure future for all.
This article was written by Grace Guthera – Certified Insurance Advisor.
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