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Covid-19 exposes fragility, gaps in the insurance coverage

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By Steve Umidha

The economic damage from the Coronavirus outbreak has already been significant and has mercilessly exposed the deep faultiness in our mainstream insurance sector which predominantly lacks radical innovations.

Now players in the sector predict a rougher 2020.

While majority of local insurers do not cover pandemic risks, experts say “out of the box strategies” will be a key component if industry players are to avoid an expected upsurge in claims that are indirectly related to the pandemic.

Tapping into the digital age, swiftly and decisively will see insurers dodge the bullet in heavy claims pay-outs.

“Digital disruption has transformed many industries over the past decade. In the same way, the transport and logistics sector was disrupted by Uber, and hospitality by Airbnb, the world of insurance is being shaken up by insurtechs and this is the best time,” said Bente Krogmann, the chief executive of mTek Services – an innovative mobile application that provides paperless end-to-end platform for the insurance industry.

Because to the uncertainties brought by the pandemic, a good number of firms are likely to be hit directly, with insurance firms to pay the heavy price.

This according to experts, could also attract fraudulent dealings in situations like double insurance, fake certificates or stolen insurance certificates among other common vices.

As a result insurers are being urged to consider establishing innovative platforms, cross-functional, emergency decision-making teams to coordinate the organization’s response, set new safety protocols, and assure quicker action as conditions continue to evolve.

Adapting to changing technological advances in the current global plague will be inevitable if the industry is to survive.

“The sector needs to adapt, make use of technology to communicate to clients in a language that they understand. Tech will help curb fraud, drive down costs, streamline internal processes and ultimately tailor products to the needs of specific income groups,” says Ms Krogmann, adding that less human interaction in distribution of insurance will also be key eliminating insurance fraud.

In 2018 for instance, according to figures by Association of Kenyan Insurers (AKI), profitability in the industry dipped from Sh9.2 billion to Sh3.5 billion with the motor vehicle and medical claims taking the lion’s share of this loss – with the report further showing that 22 percent of motor vehicle insurance policies could not be authenticated and a further 12 percent of the covers did not exist in the underwriter’s books despite payment of premiums for the cover.

This eye-popping trend led to the institution to adopt a virtual insurance certificate for motorists in Kenya as a measure to tame fraud and predatory pricing blamed on poor industry performance.

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