Have you at some point ever asked, “How will this pandemic affect our livelihood? Our hustles, education, parties & vacations, social lives…?” And then: “Our finances, savings & retirement plans?” As we wonder, “Are we sufficiently prepared to get through this? Do we have the protection we may need?” COVID-19 has glaringly highlighted the need for the African insurance sector to demonstrate its critical role in supporting people and businesses.

The pandemic has been the most severe risk event in Africa in years and for the sector to improve the narrative and rebuild trust, bold steps have to be made. Many businesses and households have been paying their premiums thinking they were covered for big risk events like the pandemic. Now, some are being forced to take general insurers to court to seek reparation. In March 2020, the Insurance Regulatory Authority in Kenya announced that all health-related COVID-19 claims would be honoured by insurers. Even though this is still being aligned in the industry, the process should be hastened by the concerned parties, especially as we already are in another wave. 

Since insurance is already an industry that individuals and businesses are wary of, especially in Kenya, many often question its value: why pay money towards something that may not actually happen? Many are willing to take the gamble instead. Unfortunately, with this perception still in mind, the pandemic has worsened the situation wave after wave, leaving the insurance industry at an all-time low. However, there still lies an opportunity for the Kenyan insurance industry to step up and rebuild trust while adapting to innovative ways of doing business. In instances where market consolidation is inevitable, regulators must act proactively to unwind weak insurers efficiently, ensuring that clients remain protected and their claims are honoured. If this transition is well-managed, there is potential to better facilitate market development and investment in products.

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At mTek, innovation is among our top priorities. The pandemic has highlighted the limited reach of insurance in the continent and that is why we are always customising our products well enough, to offer consumers value and effectively address their risks and realities. To keep up with this, regulators should keep on engaging and supporting innovators as a key part of the post-pandemic recovery process. Meanwhile, insurers should encourage internal innovation and external collaboration with fintech, to re-evaluate their approach on how to gain new customers. It’s about time the insurance sector reflects on how it can build trust in the industry by responding to customer realities and needs, as well as meeting them halfway. The sector must consider resilience holistically and go beyond offering insurance products. Insurance alone can’t be a sufficient mechanism to deal with major risks like pandemics. We need to think and consider options like risk layering, prevention, management and mitigation by both public and private players at the macro and micro levels. As we have witnessed, micro businesses have been among the worst affected by the pandemic. They need tangible solutions that help them to understand, prevent and manage their risks rather than basic insurance policies that give limited covers for specific risks.

Should insurance providers continue with the old ways of doing business or should they reinvent themselves to become more relevant to customer and business needs? Well, moving upwards is a choice totally dependent on the insurance companies’ goals and values. Clearly, insurers need to adapt their businesses for the inevitable large-scale risks on the horizon.

#besmartwithus and stay safe.