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How tech is disrupting Kenya's insurance sector – Business Daily

Companies leverage data-driven solutions, and artificial intelligence to create products that best suit their markets. PHOTO | SHUTTERSTOCK
Technology is a key driver of business development and companies that leverage it are said to reap big.
Insurance companies are getting into the technology space by offering products that are relevant to customers, and automating processing of claims among others.
Technology has enabled organisation to have timely feedback and response to customer needs in an environment is increasingly becoming customer-centered.
Insurance firm Britam Plc cites technology platforms and partnerships as areas that will accelerate its growth over the next five years.
The listed insurer notes that one of its 2021-2025 growth pillars is leveraging partnerships with digital platforms and other financial services providers to reach its customers.
The country has been struggling with a low insurance penetration rate. But there is potential for immense growth if technology is adopted in the industry.
Data from the Insurance Regulatory Authority (IRA) shows that as of the end of 2020 insurance penetration stood at 2.17 percent against the global 7.4 percent average.
The industry tends to stay traditional and is slow to change. However, new trends have been impacting the insurance marketplace, creating fierce competition.
Some of the challenges facing the industry include delivering a personalised policyholder experience, rising costs of operations, business intelligence, stiff competition and outdated technology infrastructure.
“Partnerships make it possible for products to be distributed in large volumes which is critical because these products have low margins. Technology and innovation on the other hand reduce premium collection and claim payment costs,” says Evah Kimani, Britam’s partnership and digital director.
A big barrier to insurance uptake aside from numerous products in the market is high premiums that do not cater to Kenyans living below the poverty index.
Lowering premiums has the potential to lower the entry barrier for consumers to purchase insurance products.
“These consumers are most vulnerable to life’s risks such as hospital admission or death of a loved one. These are the customers we want to protect through low premium products distributed through digital platforms,” says Saurabh Sharma, Britam’s emerging consumers’ director.
Tom Mulwa, the managing director at Liasion Insurance notes that efforts to raise the insurance uptake in the country have been made much harder by a lack of trust.
“The reason why the rate has been below 3 percent is that the industry lost trust a long time ago, and the best way to gain it back is through technology because when you provide a self-service platform then people can feel, touch, and see the service,” says Mr Mulwa.
“Other industries that leverage on technology have been able to generate very good growth. I believe that technology is going to improve that trust and catalyse growth in the insurance sector.”
Companies are leveraging data-driven solutions, and artificial intelligence to create products that best suit their target markets.
Predictive analytics is helping insurance companies identify claims that can unexpectedly become high-cost losses.
This also allows insurers to analyse their claims processes based on historical data and make informed decisions to enhance efficiency.
With predictive analytics, insurers can use data to determine events, information, or other factors that could affect the outcome of claims.
“On the retail and motor sectors we are using telematics and artificial intelligence in our business. This helps us in pricing and coming up with a rate depending on the policyholder’s behaviour,” says Mr Mulwa.
He adds that they use data analytics in various sectors such as agriculture to monitor weather patterns among others has delivered great results.
Technology has helped insurers not only identify high-risk customers but also in triaging claims, identifying odd and fraudulent claims, and providing a personalised experience.
“Use of technology continues to increase across the whole insurance value chain from product innovation, underwriting, and distribution,” obserces Tom Gichuhi, the Association of Kenya Insurers (AKI) executive director.
Mr Gichuhi adds that the adoption of tech will ease operations and provide customers with better services at more affordable rates.
“Technology will help us have access to much more data that we can synthesise to make sense of trends and also put in measures to detect and combat fraud,” says Mr Gichuhi.
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Author

Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.