In Kenya, as in many parts of the world, the insurance sector is fundamentally revered as a provider of financial security and stability to individuals and businesses alike. However, despite its importance, the industry has often been perceived as a slow adopter of new technologies in favour of its  traditional modus operandi.

To truly expand and thrive in the post pandemic era, it is imperative that the Kenyan insurance industry embraces digital transformation and innovation in line with evolving consumer patterns.

According to the 2023 Economic Survey by Kenya National Bureau of Statistics, Kenya's insurance penetration rate is at 2.3 percent. This differs in comparison to regional leaders like South Africa at 10 percent and is below the global average of seven percent, highlighting an urgent need for a paradigm shift in favour of deployment of new technologies.

The 2024 Insurance Outlook report by Deloitte further underscores this seismic shift with artificial intelligence (AI) and cloud technology identified as key drivers in amplifying operational efficiencies and catalysing innovation in product development.

One of the primary benefits of embracing digitisation is the potential to reach previously underserved or untapped markets.

By harnessing technology, insurance companies can extend their reach to everyone in urban to remote areas and offer microinsurance products tailored to people in the low-income bracket.

Mobile phone penetration which stands at 62.96 million as of last year, translating to a device penetration rate of 124.5 percent where smartphones account for  58.3 percent and feature phones (better known as Kabambes) being  66.2 percent can play a big role in enhancing the new mode of insurance products consumption.

Digital transformation can also significantly improve operational efficiency within the insurance industry.  Introducing automated systems, reducing administrative costs and improving the speed and accuracy of policy issuance, claims processing, and customer service could significantly improve service delivery and hence increase the uptake.

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Risk management and fraud detection

This not only benefits insurance companies potentially increasing their profitability but also enhances the overall customer experience, leading to greater satisfaction and retention.

Moreover, technology enhances risk management and fraud detection mechanism. Through advanced analytics and machine learning algorithms, insurers can mitigate fraud claims, minimizing their losses and enhancing the integrity of their operations, ultimately leading to a more sustainable sector.

However, for technology and digitisation efforts to truly transform the Kenyan insurance industry, there is need for concerted efforts from all stakeholders.

Insurance companies must be willing to invest in technology infrastructure and talent development to build the capabilities necessary to drive digital transformation. Recently, CIC Group announced investments towards digital technological upgrades this year.

Part of this investment went towards the launch of a digital motor insurance cover dubbed Easy Bima. The product was informed by the needs of customers seeking a flexible comprehensive motor insurance cover. This service has been made possible through technology with clients having the option of paying an equal monthly premium spread across twelve months.

Additionally, collaboration between underwriters and industry players is essential to foster innovation and drive the adoption of new technologies. This will create an enabling environment to not only increase the uptake of insurance solutions but also enhance effeciency which will benefit entities within the ecosystem.

In conclusion, the future of the Kenyan insurance industry lies in embracing digital transformation and innovation. By leveraging technology to reach new markets, improve operational efficiency, enhance risk management, and foster innovation, insurers can position themselves for long-term success in an increasingly digital world.

The writer, Fred Ruoro, is the Managing Director of CIC General Insurance Limited.