News Africa31 Aug 2020

Kenya:M&As and govt projects among factors that will drive insurance market growth

31 Aug 2020

The Kenyan insurance market should expect growth due to the mergers and acquisitions in the industry as well as big government infrastructure projects being undertaken, says Mr Jadiah Mwarania, the managing director of the Kenya Reinsurance Corporation in an article on the website of Kenya Broadcasting Corporation.

The recent Kenya Commercial Bank acquisition of the National Bank of Kenya, the merger of Commercial Bank of Africa and National Industrial Credit (NIC) Bank, the proposed construction of Mombasa Island-Likoni mainland connecting bridge, and the Mombasa – Nairobi express highway are indicators of positive market opportunities for the insurance industry.

Other projects include the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor project, the oil drilling in Turkana and the special economic zones being established across the country, he added.

Many reinsurers, however, are focusing on the short term challenges of soft rates and low investment returns. But with limited growth in traditional markets and a range of disruptive new threats on the horizon, Mr Mwarania questions whether there should be time for a more radical rethink of how to shape for the future.

Reinsurers should focus on their clients’ needs in order to have the greatest chance of securing and retaining business. As customer expectations and sources of capacity continue to evolve, the market is going to demand more creative, targeted and specialised solutions from their reinsurer.

Insurance entities will need to focus on risk insight and innovation to break away from competitors. Reinsurers must compete on more than just the pricing aspect. There is need to capitalise on internal expertise to get closer to clients and understand their needs.

Insurers should work together with the local reinsurers to propel the industry as a whole to be better and more fruitful despite the ongoing pandemic.

While there is a rising interest to explore different policies, people will look for more basic types of products due to financial constraints because of the pandemic. This means that post COVID-19, there is likely to be a hybrid purchasing mode, where consumers continue to trust reliable, accessible and knowledgeable insurance agents while seeking online options.

Post COVID-19, a speeding up of firming is expected due to uncertainty of potential loss, restricted capital inflows as a result of financial market conditions and reinsurance total risk profile concerns. The reinsurance market should heavily focus on treaty exclusions related to the pandemic as well as other contracts features that increase risk to insurers.


 

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