The fall of Concord Insurance, which was placed under statutory management on Wednesday by the regulator, is a reminder of the sorry state that characterises the Kenyan insurance industry.
Although the company controls only 0.2 per cent of the total market share, industry players are worried about the effect the collapse will have on investor confidence. The industry is yet to overcome the collapse of Blue Shield, United Insurance, Standard and Kenya National Assurance.
The sorry state is demonstrated by the fact that the big seven––Pan African, Jubilee, Kenindia, CIC, Britam, ICEA Lion and CFC––control 81 per cent of the Sh27.4 billion market, leaving 41 companies to share Sh5.2 billion.
But the problem in the insurance sector has not been that of dominance by the big firms that suffocate the smaller ones. No. The problem has been failure of the industry as a whole to innovate. In Kenya, the insurance penetration rate is only 3.03 per cent of the country’s GDP.
The industry has concentrated on the three main areas: life, motor and medical insurance business. The potential for what innovation can do to the sector is well demonstrated by the Mbao pension fund which, by using mobile money transfer, has been able to collect over Sh19.5 million in just one year of launch by requiring members to send Sh20 daily.
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