Insurance agents before a Malindi Court on May 20, 2016 where they were
charged with 11 counts of forgery. According to the KPMG report in the
Financial Times newspaper, the vice is due to insurance companies’
failure to keep tabs on their agents. PHOTO | KEVIN ODIT | NATION MEDIA
GROUP
Insurance premiums in Kenya could be around 20 per cent lower if it were not for fraud, says London-based insurance experts.
According to the KPMG report in the Financial Times newspaper, the vice is due to insurance companies’ failure to innovate in controlling costs, keeping tabs on their agents and, most importantly, getting to know their customers.
Mr James Norman, KPMG regional insurance head, told the UK-based paper: “There’s a trust deficit gap — people don’t buy insurance because they don’t trust the providers. They don’t think the promise (that a claim will be paid) is going to be delivered. Claims are not paid quickly, fairly or correctly. It’s a huge pain point across the continent,” he said.
The perception is holding back growth of Kenya’s insurance sector, the report said.
But despite this, the country is among the most advanced in sub-Saharan Africa in terms of insurance premiums outside of South Africa.
A recent report by Price Waterhouse Coopers (PWC) in the UK described the market as highly competitive.
It noted that larger insurance players in Kenya already have significant operations in Uganda, Tanzania, Rwanda as well as other surrounding countries in the wider East Africa community.
Existing insurance groups are also under threat from what are termed non-traditional providers and new entrants into the market. These include mobile phone operators and retailers.
The PWC report, Africa Insurance Trends, says Kenya - which is Africa’s ninth largest economy - with GDP growth rising from 4.6 per cent to 5.3 per cent makes this an attractive growth market.
“The rising middle class and increasing urbanisation were also mentioned as positive contributors to future insurance growth,” the report said.
Allianz and Prudential, the London-based insurer are among those that started operations in Kenya over the past 18 months although in the latter’s case, this was through the purchase of a local player, Shield Assurance.
There have been a flurry of important insurance deals across Africa over the past year because opportunities are felt to be extensive with a young population, a growing middle class and large infrastructure projects being built.
Mr Lukas Mueller, head of north and sub-Saharan Africa at reinsurer Swiss Re told the FT that the insurance market was closely linked to economic growth. “When incomes rise you have more insurable assets,” he said.
Recent deals include South Africa’s MMI Holdings buying two-thirds of Kenya’s Cannon Assurance last year, which then merged with Metropolitan Life Kenya.
More consolidation is expected across East Africa ahead of the new capital adequacy rules, which are set to be introduced in Kenya in 2018 in an effort to improve regulation.
According to the KPMG report in the Financial Times newspaper, the vice is due to insurance companies’ failure to innovate in controlling costs, keeping tabs on their agents and, most importantly, getting to know their customers.
Mr James Norman, KPMG regional insurance head, told the UK-based paper: “There’s a trust deficit gap — people don’t buy insurance because they don’t trust the providers. They don’t think the promise (that a claim will be paid) is going to be delivered. Claims are not paid quickly, fairly or correctly. It’s a huge pain point across the continent,” he said.
The perception is holding back growth of Kenya’s insurance sector, the report said.
But despite this, the country is among the most advanced in sub-Saharan Africa in terms of insurance premiums outside of South Africa.
A recent report by Price Waterhouse Coopers (PWC) in the UK described the market as highly competitive.
It noted that larger insurance players in Kenya already have significant operations in Uganda, Tanzania, Rwanda as well as other surrounding countries in the wider East Africa community.
Existing insurance groups are also under threat from what are termed non-traditional providers and new entrants into the market. These include mobile phone operators and retailers.
The PWC report, Africa Insurance Trends, says Kenya - which is Africa’s ninth largest economy - with GDP growth rising from 4.6 per cent to 5.3 per cent makes this an attractive growth market.
“The rising middle class and increasing urbanisation were also mentioned as positive contributors to future insurance growth,” the report said.
Allianz and Prudential, the London-based insurer are among those that started operations in Kenya over the past 18 months although in the latter’s case, this was through the purchase of a local player, Shield Assurance.
There have been a flurry of important insurance deals across Africa over the past year because opportunities are felt to be extensive with a young population, a growing middle class and large infrastructure projects being built.
Mr Lukas Mueller, head of north and sub-Saharan Africa at reinsurer Swiss Re told the FT that the insurance market was closely linked to economic growth. “When incomes rise you have more insurable assets,” he said.
Recent deals include South Africa’s MMI Holdings buying two-thirds of Kenya’s Cannon Assurance last year, which then merged with Metropolitan Life Kenya.
More consolidation is expected across East Africa ahead of the new capital adequacy rules, which are set to be introduced in Kenya in 2018 in an effort to improve regulation.
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