Why Kenya insurance industry sees data as the game changer

The insurance industry is critical for continuity of socio-economic activities. In the event of unexpected shocks such as fire, drought, loss of jobs and risks, insurers are expected to step in and mitigate losses and ensure financial stability for businesses and homes.

Uptake of insurance policies and covers in relation to Kenya’s economic output has, however, been on a steady slide since 2013, touching a 15-year low of 2.43 percent of the gross domestic product (GDP) in 2018. A number of factors have been cited for the sluggish penetration of insurance products, including little innovation or creativity and failure to pay claims.

Heritage Insurance Company managing director Godfrey Kioi spoke to the Business Daily on these and other developments in the industry.

WHY IS THE INDUSTRY STRUGGLING TO GROW UPTAKE OF INSURANCE PRODUCTS VIS-À-VIS GROWTH IN ECONOMIC OUTPUT?

We have not shown the kind of growth that’s expected for such an important industry. Insurance is still at the bottom of priorities for most Kenyans. If things (cost of living) get tough, for instance, it’s the first thing that drops (off the budget), in favour of the things like loans.

The government could do more in terms of providing incentives so that the common man can see value in insurance. For example, there’s a policy which gives you a waiver (tax relief at rate 15 percent of premium up to up to a maximum of Sh60,000 per year) when you take a life policy.

But the amount is so small that people do not see value in that. The tax rebates on life policy is quite small and should be increased to something like 20 percent. This is because every time the cost of living increases, life policies are the first to be dropped.

BUT AT INDUSTRY LEVEL, YOU HAVE ALSO BEEN ACCUSED OF NOT BEING AS CREATIVE AND INNOVATIVE AS OTHER INDUSTRIES. THERE’S AN AN ELEMENT OF COPY-PASTING WHEN IT COMES TO NEW PRODUCTS?

That’s somewhat true. But it also follows that we are under heavy regulations (that hinders innovation and creativity). Technology is helping us overcome some of the regulatory constraints that we have seen. It is helping us reach the customer in a different way and at affordable rates.

DATA IS THE NEW OIL. HOW ARE YOU TAPPING THIS TO UNDERSTAND THE CUSTOMER BETTER?

Data sharing is now in place with the Association of Kenya Insurers (industry’s umbrella body). And that will be the game changer.

Data is an enabler that’s helping us to know the customer more. When you know the customer you position your products appropriately and grow.

The data is very important for pricing and ability to provide targeted service to the customer. Even doing a simple thing like getting a customer’s telephone number and being able to get back to that customer and call him by name, is a big step for us.

WHERE ARE YOU AS INDUSTRY WHEN IT COMES TO GETTING AND USING DATA?

The journey that we are embarking on is to ensure we use data analytics and social media knowledge to understand the customer’s lifestyle.

Because if we know your lifestyle, we can tell what risks you are facing and what products you are likely to afford.

It is not that people don’t know about insurance. The awareness is about 90 percent, but very low uptake.

This is unlike the banks where there’s high awareness and equally high consumption. It comes back to how we create value in insurance policies to help us increase the uptake.

HOW DO YOU ENSURE THE DATA YOU COLLECTED IS NOT USED TO INVADE CUSTOMERS’ PRIVACY?

Most of us are on social media and we share very personal information without a care in the world about our relationship. As an industry, we have asked that people share data with us.

This data will be used for insurance purposes only. There’s a disclosure on how the data will be used and there’s an undertaking on our side to protect that data.

This is not because it is now electronic and digital data, but it will be protected with the same zeal and infrastructure as we have protected it manually.

So you are sharing your data willingly, we have undertaken to treat it confidentially and only share it when we have the authority to do so, mainly from the policyholder. We are bound by all existing laws.

HOW ARE YOU ADDRESSING NON-PAYMENT OF CLAIMS, WHICH IS ALSO A DAMPER TO UPTAKE OF COVERS?

This is another aspect that will drive the consumption of insurance because it is the one that builds trust. As an industry, we have been accused of pulling the small print where the claim occurs. That goes to show there was miss-selling and the customer did not understand what they were covered for.

But claims processing and settlement is now faster where the policy terms and conditions that govern the process have been met. This includes reporting and the paper work.

As Heritage, for example, it should take us four weeks to settle a claim on average. But that depends on the nature of the policy, which impacts on the assessment and investigation time. If we can process claims in a seamless manner, we will build the trust in our customers.

HOW HAS YOUR AUTO-CORRECT MOTOR POLICY BEEN RECEIVED?

The reception we have got since we launched last month is not very different from what we would have expected. The customer of today wants to work with a brand that rewards her and be treated as an individual. On a positive side, we are seeing traction. If you drive well and you don’t claim, the premiums should be commensurate and different from a person who doesn’t drive carefully.

The premiums will be informed by how well you drive and this is driven by the data we collect which gives you a score.

The data that we share on the telematic devices enables us to process claims without having to employ an investigator and without going to the scene of the accident. There are no questions we ask because we are able to see the incident happen, and that enables it to be processed at the earliest time possible.