Claims in the digital age: How new trends are shaking up Kenya’s insurance landscape

By Steve Umidha

Kenya’s insurance industry is in the midst of a radical, digitally infused shake-up – with insurance firms fast adopting innovative products aimed at not only enticing new customers but also depressing claims payouts.

What’s even interesting is that many customers are embracing these new digital channels, and technologies such as the recently launched ‘Auto Correct’ motor insurance product by Heritage Insurance and a wellness program by UAP Old Mutual Group that have both ushered in an era of new products built on data and analytics.

Owing to the rapid growth of technology, more and more insurers are redesigning their business models in embracing a customer-centric mind-set and undertaking an end-to-end reassessment of their customer interactions.

Last week saw two decisive innovative unveilings by two industry heavyweights in what could as well define the market in the coming weeks perhaps months, with more such launches from other players in the pipeline.

“Telematics is not limited to the pricing of motor insurance or driver behavior. Our philosophy is cementing customer-centrism in the industry by engaging the customer and generating rewarding and memorable experiences.

The advent of the 4th Industrial Revolution is reshaping customer behavior, creating a desire for personalization and transparency from companies. With telematics, we can make more effective use of data to deliver enhanced customer experiences, while posting improved motor insurance results for our shareholders,” commented Godfrey Kioi, Managing Director of Heritage Insurance Kenya, during the launch of ‘Auto Correct’ motor insurance is powered by telematics technology – a method of capturing and processing driving data.

Auto correct is comprehensive formula makes use of the driving data collected to calculate an appropriate driving score. With the anticipated reduction in the overall claims to the company, the customer is expected to benefit through reduced cost of insurance achieved through premium cashback to the customer at the end of each policy year, based on the customers’ overall driving scores.

The product targets private motor vehicle owners are eligible for Auto Correct and may potentially get up to 15 per cent cash back on annual paid premiums at the end of their policy period, if they drive safely. They will also accumulate loyalty points, which can be redeemed from time to time at selected service providers.

“We value our customers’ well-being and their feedback is paramount to us; that is why we came up with this solution that will help them keep track of their health on the go”, commented UAP Old Mutual Group Insurance David Kuria during the launch of the Group’s wellness program which is geared at making the lifestyle of an individual better and healthier.

The program is centered on three key pillars: knowing your health, improving your health and getting rewarded. It will be supported by an application (App) called Go Plus which can be downloaded on the Google Play Store and App Store.

The activities include going for regular check-ups, forming a community using Go Plus and engaging in various health activities like hiking, running cycling among others and earning points which can be redeemed via; going for a holiday with a selected partner, Gym Membership with a gym in the UAP Old Mutual Group panel and UAP Old Mutual Products.

Despite the signs of a growing industry, insurance market continues to face myriad of challenges including slow uptake of indemnity covers by Kenyans, fraud and a stagnating penetration that is below 4 percent.

“As it is right now, most Kenyan communities have organized themselves into groups that help each other at the community level in case of events like death and sickness. This is one key insurance product; the life insurance cover.

This leads to reluctance of people in purchasing these covers as the community level feels more convenient. To solve this, insurance companies should figure out a way to make obtaining such covers hassle free. People hate lengthy procedures when they can simply make a monthly commitment to contribute to a community Chama. If a saving means for an organization was possible, it could also bring in more business as the already formed groups can join as units,” reads a commentary by investment firm, Cytonn Investments.

Kenya’s Insurance sector has definitely had its fair share of wins and losses in the recent years. Due to the harsh economic times rocked by two elections, low insurance penetration and insurance fraud, this sector has been dealt its hardest blow yet.

The industry as a whole experienced an underwriting loss of KShs 1.65 Billion in 2018. Making it the biggest loss experienced in the past 10 years with the total profit after tax down from KShs. 11.05 Billion to KSh 6.82 Billion in 2018 as both claims and management expenses increased across the board.

The regulatory changes made in 2016 resulted in the increase of costs for some insurance companies. This may have directly resulted to increased capital injection into insurers especially those that were moving into the general insurance space.

The sector has also been heavily affected by fraud which is a common problem all insurers face. Fraud has shown its face in different shapes and form.

“All is not lost for the insurance industry, we can turn things around through product innovation and strategies that focus on automation and analytics that will improve customer experiences, strengthen and create new partnerships, improve county business and alternative distribution while reducing management expense.

Before we do this it is extremely important to implement educational campaigns within the country in order to help demystify and breakdown the role and importance of insurance as a critical part of life so as to encourage and initiate trial and uptake of more insurance products,” says Managing Director of Resolution Insurance, Alice Mwai.

She is urging insurers to constantly be on the lookout for partnership opportunities across the board to help us diversify and appeal to a larger target.

“Insurance is here to stay and the industry’s prospects are nothing but positive.”