In Kenya, where a significant portion of the population falls within the low-income bracket, microinsurance has the potential to play a crucial role in providing financial protection against various risks. These risks can include health emergencies, crop failures, property damage, and other unforeseen events that can have a significant impact on the livelihoods of individuals and families.
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A report from the Association of Kenya Insurers shows that the number of micro-insurance products has increased by 41.8% to 55 in 2023 from 32 in 2015. The most popular microinsurance products were Health insurance, personal accidents, and last-minute expenses. AKI Executive Director Tom Gichuhi advised that microinsurance is a powerful tool that protects low-income personnel from financial risks and helps break the poverty cycle.
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The Micro-insurance regulations describe the micro-insurance products as having a term of less than one year (renewable), not less than Kshs 40 in premium collection on a daily basis, and a sum assured of not more than Kshs 500,000. Micro-insurance underwriters are also required to register separate businesses from conventional insurance.
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The report also explained the need for simplification of products and the language used to describe them. It stated that for microinsurance to work, there is a need for partnership with a variety of institutions, such as development partners, technology partners, insure-techs, the government, and also business associations and aggregator groups like Churches and SACCOs. There is also a need to focus on leveraging digital channels to help in the distribution of microinsurance and also on the price flexibility of premiums.
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