Insurers push for customer-focused insurance industry to boost penetration

Insurers push for customer-focused insurance industry to boost penetration

The Commissioner for Insurance in Kenya, Godfrey Kiptum, has called on insurers to focus on micro-insurance products, commonly known as hustler products, to deepen penetration in the market.

Speaking at the 8th CEO Reinsurance Summit that gathered delegates from the insurance space across Africa to Kenya, Mr Kiptum described the people at the bottom of the social pyramid as ‘hustlers’ and said insurers should ensure that these people are included and protected.

Following on from comments from group managing director of Continental Reinsurance, Lawrence Nazare, about the need to reach deeper into markets, Mr Kiptum said it is expedient for insurers to increase protection of people at the bottom, adding that this should be considered the biggest challenge for the industry at the moment.

Mr Nazare said that there is need for resilience to be able to meet up with the worst consequences of the world, adding: “Commitment and trust is what makes and builds insurers. With commitment, we can move mountains and fulfil the uphill task of service delivery to our clients.

“The opportunities for growth abound. However, we need to focus on the protection challenges the industry faces across Africa. And it’s through commitment that we can achieve this,” Mr Nazare said.

He added: “The question we need to ask is: are we doing enough as practitioners to be building products and offering services that tackle the challenges that those at the bottom of the pyramid face.”

“Technology is disrupting every sector of the economy, but disruption creates opportunities, and by embracing technology, we can tackle the challenges of the industry much better. We should not ignore the need to be resilient, as well as commitment and the factor of time, as these are the growth engines of the sector,” he said.

However, Mr Kiptum pointed out “When Covid-19 came, all the insurers buried their heads in the sand because they did not want to take responsibility. And it was very sad. However, from that time, there are lessons that have been learned and there has been more progress in the way the sector handles issues, and the sector is moving on quite well.”

He added: “I want to encourage you to continue to include everybody in your protection and in your plans. And we need to think around micro-insurance, as it is what will bring everybody aboard. This is not something that can be achieved all at once, but with your collaboration and your effort we shall be able to get there.”

Regulation for a client-focused sector

Meanwhile, Joseph Githaiga, head of legal business solutions, Pricewaterhouse Coopers Kenya, suggested enhancing consumer protection is behind the way in which the regulatory environment in the African insurance market is undergoing significant changes, with a focus on improving reporting standards and sustainability.

The introduction of the International Financial Reporting Standard (IFRS) 17, Mr Githaiga said, is a step towards improving transparency and accountability in the industry.

In addition to the changes to reporting standards, there are also updates to laws surrounding data protection and environmental, social, and governance (ESG) reporting requirements, he explained.

While organisations in the past only minded the profitability of their businesses, the trend now, he said, is that one has to care what is happening around them as everyone gets affected in the long run.

“ESG initiatives have become a strategic imperative for nearly all organisations and there is increased focus and pressure from investors, regulators, employees and other stakeholders to make ESG a topic that is not only critical at the board level, but also essential to cascade throughout organisations operationally and sustainably,” Mr Githaiga said.

All this calls for a more vigilant regulation strategy to build confidence in the market, he said. “And creating confidence in the market means you have to listen to the customer, pay claims promptly, knowing that you cannot exist alone.

“In addition, this also means you have to create a platform for positive engagement with the insureds. We want to make sure that we encourage the market to grow. And this happens when there is confidence in the market.

“Innovation, therefore, has to be at the core of your business strategy. You need to go to the people, listen to them and see the areas that you can improve. This will give you stakeholder value and the consumer will be catered for,” he noted.

Olorundare Sunday Thomas, Commissioner for Insurance in Nigeria, said diminishing public trust due to compliance issues are a contributing factor to low uptake of insurance policies.

“Therefore, there is need for a more robust and updated regulation system to streamline the sector for growth. Sustainability is all about creating products that are relevant in the market,” he said.

“The other concerns are around data collection. The data that is collected from consumers, how it is used or even stored and managed is a global concern,” he added.

If you are wondering what that has to do with the sector, he said that you need to understand that that data doesn’t belong to the institution, as you have to declare how you use it and who you share the information with.

In the last three years, some EA countries including Uganda, Kenya and Rwanda have been revising their regulations, and other countries like Nigeria are in the process of revamping their laws. This is aimed at harmonisation of standards, added Mr Githaiga.

So, individual countries have to pay attention to what their counterparts are doing in the industry, as these updates aim to improve the quality of data used by insurers, which is essential for accurate pricing and risk management, he said.

Market trends

According to Mr Githaiga, market structure changes are also expected, with mandatory consolidation and market entry by foreign firms. This is expected to improve competition and increase the availability of insurance products for consumers.

However, Mr Thomas hinted that regulatory interventions may be required to address solvency concerns and ensure consumer protection, but was confident that these regulatory changes will lead to an increase in insurance uptake in the long term.

“As the industry becomes more transparent, efficient and customer-focused, insurers will be better equipped to provide affordable and relevant products to consumers,” he said.

He added that the evolving regulatory environment in the African insurance market is positive as it is meant to address emerging challenges such as reporting standards, market structure and consumer protection.

While the economic situations in the region continue to pose challenges, these changes, he said, are expected to improve the industry’s efficiency, transparency, and accessibility, ultimately benefiting consumers across the continent.

Mr Githaiga said African regulators can encourage innovation in the insurance industry by creating an enabling environment that supports the development of new insurance products and services. This includes promoting the use of technology in insurance, such as mobile insurance and online platforms.

“In addition, regulators can work together with industry players, such as insurance providers and brokers, to develop solutions to regulatory challenges,” he said. “This can be done by engaging in dialogue to identify areas of improvement, sharing information and best practices, and collaborating on initiatives aimed at improving the industry.”

Overall, Mr Githaiga said addressing the regulatory challenges in the African insurance markets will require a collaborative effort from all stakeholders, including regulators, insurance providers, consumers and other industry players.

By working together, he said it is possible to create a vibrant and sustainable insurance industry that serves the needs of all Africans.



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