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Kenya’s Bancassurance Model: Profits against Industrial Fraud


Open Message to Kenya’s Insurance Firms

According to a Business Daily article dated September 16, 2019, Nairobi County stands out as the largest source of premiums for insurance companies with 80.67 percent of total premiums collected in 2018 originating from it, up from 72.76 percent the previous year. Data from the Insurance Regulatory Authority (IRA) shows Nairobi handed insurers Kshs. 173.2 billion while the other 46 counties fetched them Kshs. 41.5 billion. The implication is that most of the insurance firms were chasing for the same clients in the city while ignoring the rest of the counties despite growing insurance risks. Additionally, the same article claims that insurance penetration in the country, measured against the Gross Domestic Product (GDP), has dropped to 2.43 percent, the lowest in 15 years, made worse by poor marketing, price undercutting and fraud among other challenges (Alushula, 2019).

Insurance fraud is a challenge that’s been highlighted over the years by analysts and experts within this industry, not only in Kenya but globally. Fraud within the automotive sector is the only one which seemingly has an existing solution to, on the basis that other countries have taken steps to address it through the use and adoption of Microdot Technology, and the statistics have shown the beneficial aspects of this approach.

In our opinion, it’s about time for Kenya’s insurance firms to take the same steps as other countries to address vehicle insurance fraud, not only for the benefits of its clientele who pay the premiums that they then make profits from, but for the benefit of the insurance companies themselves since they incur losses originating from settling fraudulent claims, consequently justifying increasing  premium charges, carrying out job-cuts in order to maintain profitability and putting focus on partnerships that earn revenue for the company while ignoring the existing problems within the industry… challenges which affects their clientele directly and indirectly both in the short and long term.

The lack of response to the problems only fuels the tricksters who’ve made huge fortunes, giving them time to devise new ways of carrying out their operations without any interruption.

In conclusion, the report quoted earlier on indicates that there is a large unexploited market outside Nairobi County.  Furthermore, it is generally known that insurance services in Kenya have a relatively low consumer intake and so legit questions do arise as to where the billions come from.  Having the understanding that Bancassurance exists as a tool intended to penetrate the insurance sector, our company Liotrack Limited can provide microdots, to the extent in which they can be used to diversify existing non-life products while giving assurance that they will help address insurance fraud with profitability being realized across the whole chain.

Works Cited

Alushula, P. (2019, September 16). Insurance firms overlook counties for Nairobi’s low-hanging premiums. Business Daily , pp. 12-13.

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