- The insurance industry has been slow to innovate compared to the rest of the financial sector
- Technology is one of the levers ZEP-RE aims to use to increase insurance penetration in the COMESA region
- The forum aims to bring together stakeholders from innovators, insurance companies, reinsurers and regulators to fast-track innovation
PTA Reinsurance Company, ZEP-RE is collaborating with Kenya's insurance industry to aggressively embrace technology and help expand access to insurance service.
Speaking at a CEO Breakfast on the 19th of September 2019, which brought together CEOs, CIOs, and Heads of Innovation and Strategy from various insurance firms, ZEP-RE Managing Director Ms. Hope Murera said the insurance industry was ripe for innovation and that disruption through adoption of technology designed to achieve savings and efficiency was long overdue.
The CEO Breakfast was followed by an Insurtech Forum, in which delegates heard that the Kenyan insurance regulator is actively progressing a regulatory sandbox to enable innovation and start-ups within the local market.
Ms. Murera stressed “The insurance industry the world over is undergoing disruption. Africa where we play is no exception. It is against this background that ZEP-RE has organized this forum to brainstorm and share ideas meant to ensure that the insurance industry players are able to seize opportunities arising from this inevitable disruption.
“Through the use of technology, the industry has an opportunity to embrace analytics further to come up with customized products that meet user requirements, new product development to expand and grow the pie as well as improve efficiencies that will lower distribution costs making insurance more accessible. The insurance industry the world over has been slower to innovate compared to the rest of the financial sector which has motivated ZEP-RE to champion innovation at the industry level in this regard through forums such as this,” Ms. Murera said.
Harnessing technology is one of the levers ZEP-RE aims to use to deliver its mandate of increasing insurance penetration in the Common Market for Eastern and Southern Africa (COMESA) region and the continent at large.
Speaking at the Insurtech forum, ZEP-RE’s Chief Information Officer Mr. Alexio Manyonde said: “We have mobilized a number of start-ups and innovators in the insurance space and we will provide them with the platform to showcase their technology to wider industry leadership at the Insurtech forum. Our ultimate goal is to pair tech innovators with insurance service providers as means of starting the journey of development, mentorship, partnerships and joint development initiatives leading to actualization and commercializing of ideas”.
ZEP-RE Chairman William Erio added that the insurance businesses, both in individual and regional markets had experienced challenges ranging from access to services and products, low levels of penetration and appreciation of the importance of insurance services due to low levels of financial literacy, and moral hazards such as fraud which were impacting on the proper growth of the industry.
He, however, noted that ZEP-RE was willing to support efforts to promote insurance inclusivity and financial deepening in the region.
“On the positive, we are seeing a strong sense of innovation coming into our products and service offering. The industry is also witnessing disruption in the distribution mechanisms with technology starting to play a central role. As a Company we are willing to support initiatives that will ease access to insurance especially by the low- middle income population,” Mr. Erio said.
Robert Kuloba, Chief Manager for Policy, Research and Development at the Kenyan Insurance Regulatory Authority, said one of the biggest issues facing insurance market players today is how to cope with rapid changes and developments that come with emerging technologies whether demand side, supply side and legal and regulatory space.
“From a value chain perspective, the digital future of insurance has indeed redefined the playing field with many unanswered questions for literally anything about everything,” he said, stressing consumers’ needs have evolved; distribution channels have digitalized; the Internet of Things is affecting how risk is underwritten and predicted; and peer-to-peer technology is set to affect claims management.
“Further, we are also witnessing a situation where the existential role of regulators and business as usual models of insurance sector players being questioned by the disruptions in the sector. A newer and more adaptive digital innovation space is promising to dramatically shape changes in the financial market landscape now and in the near future,” said Mr Kuloba.
“IRA’s strategy of promoting an inclusive insurance industry through innovation is anchored on the regulatory sandbox that is set to be up and running in the coming financial year. A policy paper on regulatory sandboxes has been developed and resources ringfenced to ensure its operationalization by June 2020 as a primary measure of ensuring not only meets regulatory requirements but more importantly is geared towards meeting societal needs given the many startups.”
Jubilee insurance Chief Executive Julius Kipngetich urged the industry players to consider linking up with innovators, learn from non-direct competitors, and remodel their businesses by moving from selling to marketing.
“Our industry brothers in the banking sector have learnt something that we in the insurance sector haven’t. We need to start working closely with innovators and thinkers – these are the people who create meaningful disruption in the insurance industry,” Mr. Kipngetich said.
Kenya Association of Insurers (AKI) Chief Executive Officer Tom Guchuhi said the sector should take innovation seriously to stake off the decline of the sector.
“We have seen this industry going down-down but we don’t seem to know what to do about it. We seem to live on hope that tomorrow will be better. The sector needs to think seriously about innovation and do it collaboratively,” Mr. Gichuhi said.
According Kenya Association of Insurers (AKI) industry report for 2018, insurance penetration in Kenya dropped to 2.43 percent of Gross Domestic Product (GDP), the lowest in more than a decade. The drop in penetration levels resulted into a 61.56 percent drop in net profits from KSh9.21 billion to KSh3.54 billion.