Kenya microinsurance landscape: Market and regulatory analysis (2010)

"If only 1 million M-PESA users and 1 million Kenyans with bank accounts who are currently uninsured buy insurance through these channels, market size will increase by more than three-fold from 3% to 10% of Kenyan adults."

 

This is just one of the many opportunities and findings from the recently completed Cenfri study, commissioned by the Insurance Regulatory Authority (IRA) of Kenya and funded by the International Labour Organization (ILO), United Nations Capital Development Fund (UNCDF) and Financial Sector Deepening Trust Kenya (FSDK) to consider the opportunities and challenges to microinsurance development in Kenya.

The diagnostic study reviews the opportunities and challenges facing the Kenyan microinsurance market and is intended to catalyse a process through which all Kenyan stakeholders can collaborate to realise it's full potential. It includes a demand-side analysis, overview of supply and distribution, as well as a review of the regulatory framework.

 

The diagnostic identifies a vast un-tapped potential market for insurers:

  • While many Kenyans are poor, 53% Kenyans have incomes between US$ 2 and US$ 10 per day, representing  a potential target market of 10.8 million adults
  • Conservative estimates of the voluntary microinsurance market is 150,000-200,000 policyholders, but if formal credit life insurance policies are added to this number, the estimate increases to 650,000-700,000 users (3% of the Kenyan adult population).
  • If only 1 million M-PESA users and 1 million Kenyans with bank accounts who are currently uninsured buy insurance through these channels, market size will increase by more than three-fold from 3% to 10% of Kenyan adults.

Supported with key findings for how to recognize that potential: 

  • Regulation poses barriers, but these are not insurmountable given regulatory reform process.
  • Microinsurance offers an opportunity for the under-developed insurance sector to expand.
  • Focusing on anchor risks can help overcome distrust in the insurance industry.
  • Health risk has been the growth and innovation point for microinsurance in Kenya.
  • Funeral as anchor life risk offers distinct opportunities for insurance companies and community-based organisations.
  • Agriculture offers microinsurance opportunities around value chains and networks.
  • Banks and emerging network of payment system agents offer potential distribution channels.

To help further support collaboration, a stakeholder workshop was held to bring together the various stakeholder groups and to give them the opportunity to engage with the findings of the study and to share opinions on the validity thereof and the strategies going forward.

 

The stakeholder groups included:

  • MFIs and Cooperatives
  • The banking sector
  • The agricultural sector aggregators
  • Small business aggregators
  • Church, Community and other affinity groups 

Additional Info

  • Country: Kenya
  • Institution: Cenfri, ILO, UNCDF, Access to Insurance Initiative (A2ii)
  • Date Published: 2010
  • Document Type: Diagnostics, Presentations
 

Kenya microinsurance landscape: Market and regulatory analysis (2010)

"If only 1 million M-PESA users and 1 million Kenyans with bank accounts who are currently uninsured buy insurance through these channels, market size will increase by more than three-fold from 3% to 10% of Kenyan adults."

 

This is just one of the many opportunities and findings from the recently completed Cenfri study, commissioned by the Insurance Regulatory Authority (IRA) of Kenya and funded by the International Labour Organization (ILO), United Nations Capital Development Fund (UNCDF) and Financial Sector Deepening Trust Kenya (FSDK) to consider the opportunities and challenges to microinsurance development in Kenya.

The diagnostic study reviews the opportunities and challenges facing the Kenyan microinsurance market and is intended to catalyse a process through which all Kenyan stakeholders can collaborate to realise it's full potential. It includes a demand-side analysis, overview of supply and distribution, as well as a review of the regulatory framework.

 

The diagnostic identifies a vast un-tapped potential market for insurers:

  • While many Kenyans are poor, 53% Kenyans have incomes between US$ 2 and US$ 10 per day, representing  a potential target market of 10.8 million adults
  • Conservative estimates of the voluntary microinsurance market is 150,000-200,000 policyholders, but if formal credit life insurance policies are added to this number, the estimate increases to 650,000-700,000 users (3% of the Kenyan adult population).
  • If only 1 million M-PESA users and 1 million Kenyans with bank accounts who are currently uninsured buy insurance through these channels, market size will increase by more than three-fold from 3% to 10% of Kenyan adults.

Supported with key findings for how to recognize that potential: 

  • Regulation poses barriers, but these are not insurmountable given regulatory reform process.
  • Microinsurance offers an opportunity for the under-developed insurance sector to expand.
  • Focusing on anchor risks can help overcome distrust in the insurance industry.
  • Health risk has been the growth and innovation point for microinsurance in Kenya.
  • Funeral as anchor life risk offers distinct opportunities for insurance companies and community-based organisations.
  • Agriculture offers microinsurance opportunities around value chains and networks.
  • Banks and emerging network of payment system agents offer potential distribution channels.

To help further support collaboration, a stakeholder workshop was held to bring together the various stakeholder groups and to give them the opportunity to engage with the findings of the study and to share opinions on the validity thereof and the strategies going forward.

 

The stakeholder groups included:

  • MFIs and Cooperatives
  • The banking sector
  • The agricultural sector aggregators
  • Small business aggregators
  • Church, Community and other affinity groups 

Additional Info

  • Country: Kenya
  • Institution: Cenfri, ILO, UNCDF, Access to Insurance Initiative (A2ii)
  • Date Published: 2010
  • Document Type: Diagnostics, Presentations
 

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