Book exposes why Kenya's insurance industry faces trust crisis

The insurance industry in Kenya has evolved significantly in the last two decades recording notable gains to become an indispensable component during life’s uncertainties.

Designed to provide a safety net during uncertain times, insurance companies offer a diverse range of products to meet the needs of individuals and businesses.

However, challenges such as low penetration, fraud, and solvency issues continue to impact the sector’s stability.

Insurance penetration in the country remains low, stagnating at between 2.3 per cent and 2.4 per cent of the Gross Domestic Product (GDP) — significantly below the global average of over seven percent or African average of 3.4 per cent despite economic recovery, regulatory advancements, and increasing digitisation.

It is against this backdrop of challenges that one Dr Daniel Murage took a deep-dive into the sector to come up with a diagnosis and possible treatment of what ails the industry.

The Insurance Gap: A Strategic Blueprint for Growth in Emerging Markets is the outcome of the burning desire by Dr Murage to try to unpack the existing gap in the sector by offering a thought-provoking insight into persistent challenges facing the insurance industry in Kenya and across emerging markets.

The author avers that for years, the insurance industry in Kenya has operated under the assumption that insurance is a rich person’s product and the low uptake is a natural consequence of Kenya’s demographic profile.

Nonetheless, the book tries to challenge the long-held perception and myths through empirical evidence, critical analysis and strategic insights moving beyond conventional explanation in order to explain the widening disconnect between the need for insurance protection and the willingness by consumers to embrace the product.

Drawing on his over 20 years of leadership experience across financial services, digital banking and insurance, the financial strategist points out that at the heart of the persistent challenges dogging the insurance industry is perception and trust deficit.

According to the author, the insurance industry has operated under adversarial claims philosophy, rooted in a culture of suspicion resulting in a deep-seated mistrust of insurance companies by the very people it is supposed to serve.

The crisis of trust has been fuelled by delayed or denied claims, deliberate attempts by companies to find loopholes to avoid paying claims and lack of transparency.

At the heart of the fascinating problem is a fundamental question on why an industry designed to provide security and protection continues to struggle to earn trust and confidence of the very people it seeks to protect.

Drawing on empirical evidence, critical analysis and strategic insights, Dr Murage reveals that the primary barriers to insurance uptake lies in perception, trust, financial literacy, institutional credibility, product complexity, consumer experience and digital engagement.

Offering more than a diagnosis of the challenge, the author provides a rigorous, evidence-based diagnosis of why the gap exists and persists.

The 152-page book is divided into three parts with the first part tackling the perception paradox and the crisis of trust.

The second part of the book focuses on strategies insurance companies can use to build the waning trust among its clientele, while the last part delves into the future offering a roadmap to the coveted global seven percent average.

The book opens up by tackling the issue of perception paradox and the crisis of trust with the author offering a diagnosis of how the sector found itself in the cul-de-sac.

Going beyond obvious explanations by leaning on data and research from major studies, Dr Murage explains that the perception paradox is a result of insurance being seen as an insulation to potential risks, people see it as risk itself and at worst, a scam.

The author also tackles the long-held cost fallacy where the industry thinks Kenyans are not embracing insurance because they cannot afford it.

Nonetheless, the book demystifies the belief saying the primary barrier to insurance uptake in Kenya is not affordability but trust deficit, which is tied to the perception paradox where most Kenyans believe that insurance architecture is a system designed to collect premiums and deny claims.

“The real insurance gap is not about money but trust or lack of it as the sector is suffering from the crisis of trust,” avers Dr Murage.

“Cost is not the barrier but perceived value and trust are the true drivers, people are not saying I cannot afford it but are saying I do not trust you to pay me when I need it.”

Apart from the perception paradox, cost fallacy and trust crisis, the author introduces a fourth element that is also slowing down insurance uptake in the country – digital disconnect.

According to Dr Murage, the insurance industry has failed to adapt to the digital reality of modern Kenya by remaining traditional in its communication and distribution.

He argues that the industry is still stuck in old-school, paper-based ways while trying to reach a generation that lives on their phones, with at least 75 percent of Kenya’s population made up of the youth.

The reluctance to embrace social media and digital engagement, the author points out, is a failure to move with changing times by using digital platforms to showcase successful claims as well as automate payouts to provide visible proof of peace.

“This social proof is the only way to override the entrenched misconceptions and fatalism of digital disconnect.”

Rather than just leave at the problem-identification stage, the author goes ahead to prescribe solutions to the persistent challenges facing the critical sector.

He says that the insurance industry needs to make a major shift by stopping the obsession with premiums and products and start focusing on people and trust. This is by stopping the obsession with selling just a financial contract but a promise that fits people’s needs.

Part two of the book looks at building the architecture of trust by re-engineering the claims process turning it from adversarial to collaborative process.

Dr Murage says that insurance companies must learn to speak the language of informal networks, who constitute 83 percent of the working population, by simplifying the insurance products language.

He says it is time the industry moves away from the fixation with a foreign language dense with legal jargon that even highly educated people struggle to understand and leaves out people with lower literacy.

This is by trying to dismantle the jargon and coming up with policies people can easily understand.

Further, the author challenges the sector to embrace social media as a marketing tool to spread awareness and demystify the myths by leveraging on data on consumer insights.

Part three looks at the future of the industry and the road to the coveted seven percent penetration by offering a solution roadmap, concluding that the insurance gap is a solvable problem, laying a vision on for what the Kenyan insurance landscape could look like

He posits that by tackling the perception paradox and closing the digital disconnect, the country can finally hit the seven percent penetration target and turn insurance from some niche financial product into something that actually stabilises the economy.

“By reframing insurance as a tool for peace of mind and community resilience, rather than a cold financial bet, the industry can overcome fatalistic barriers,” says the author.

The book is useful for insurance executives, government policymakers, entrepreneurs and related stakeholders.

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comulo@ke.nationmedia.com

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