This archive report was first published on 2 August 2019.
Kenya's insurance industry is on the cusp of a significant transformation with the implementation of the International Financial Reporting Standard (IFRS 17) from 2021. This new standard is expected to promote transparency and encourage better product design, ultimately benefiting the industry as a whole.
According to Jadiah Mwarania, Managing Director of Kenya RE, IFRS 17 will address issues of transparency, improve products, and help solve problems related to pricing and limited awareness within the industry.
Despite the challenges, insurance players are optimistic about the opportunities for growth in the industry, provided the right strategies are put in place. However, the industry still faces significant hurdles, including low insurance penetration, estimated at 14 percent across the Sub-Saharan Africa region, and a mere 4 percent in Kenya, particularly in the re-insurance sub-sector.
Kenya RE Managing Director Jadiah Mwarania attributes the low insurance uptake in Kenya to the level of poverty and low awareness on the importance of insurance. Additionally, the high cost of insurance and commission payment issues have negatively impacted the industry.
Industry players are hopeful that mergers and acquisitions will strengthen operations and services, leading to improved performance. This optimism is reflected in Kenya RE's recent announcement of a net profit of 1.23 billion shillings, although this figure is 12.2 percent lower than last year's due to a 49 percent increase in claims.
Kenya RE is facing stiff competition from re-insurers in countries such as Nepal, Ethiopia, and Uganda, making it essential for the company to adapt and innovate to remain competitive.
