NAIROBI (Xinhua) --
Kenya is to give an official go-ahead to
insurance companies and other investors to start selling
low-cost insurance products as the country seeks to increase the
number of its nationals covered by insurance policies.
Insurance Regulatory Authority (IRA) said on Tuesday that it is
holding consultations with all the stakeholders following
successful development of the proposed law to guide the
establishment of low cost insurance companies known as micro
“The laws that we
have proposed are based on the best global practices on
microinsurance,” said Godfrey Kiptum, the Chief Executive
Officer of the IRA during consultations with the industry at the
Kenya’s College of Insurance in the capital Nairobi.
Kiptum called on the
industry to prepare to offer Kenyans affordable insurance
products that meet their most relevant needs.
He said insurance
companies must change their perception to accommodate the needs
of low income earners who are expected to be the main buyers of
low-priced insurance products.
industry in Kenya is still very traditional and rigid in its
practice. We need a paradigm shift,” he said.
Statistics by IRA
show that insurance industry in Kenya contributes 3 percent to
the national economy every year.
Although this is the
highest contribution in East Africa, with the rest of economies
gaining less than one percent from the industry, it is still
seen as low as because in markets like South Africa, insurance
contributes 14 percent to the economy.
He said companies
venturing into micro insurance must get out of conventional
thinking and invest in high level of innovation to create the
best understanding of the new market.
The proposed law
comes just days after President Uhuru Kenyatta committed to
register about 26 million Kenyans to the National Hospital
Insurance Fund (NHIF) from the current seven million Kenyans, as
part of his legacy of providing universal health insurance.
regulator in Kenya has also proposed regulations to guide banks
that sell insurance products under what is known as
Kiptum said one of
the key concern the proposed law addresses is the complaints
that banks are forcing clients who take loans with them to take
insurance from the same banks.
“Kenyans must be
given a right to choose and therefore the proposed regulations
prohibit banks from insuring loans to their customers,” said
But he said the prohibition is an optional measure if the
banking industry can come up with a proposal that will help to
end this aspect of clients being forced to take credit insurance