Godfrey K Kiptum, Commissioner of Insurance; and CEO, Insurance Regulatory Authority (IRA) : Interview

Intewrview : Godfrey K Kiptum

How can the private sector work to increase the contribution of insurance to Kenya’s GDP?

GODFREY K KIPTUM: A prerequisite for insurance to achieve a more prominent place in the economy is for insurance companies to develop innovative products. Specifically, significant opportunities for innovation exist in distribution. Companies will eventually need to rely more on technology platforms and new applications, since the cost of reaching out to the customers – regardless of their income – tends to decrease as technology is deployed on a larger scale. The IRA is promoting access to insurance at all levels of society and actively engaging with the industry in order to achieve this.

Another key focus lies in the overall financial health of the sector: the increase of capital requirements for businesses is a step in that direction. It is very likely that some companies will merge, acquisitions will take place or existing players will actively seek additional capital in the short to medium term. This is expected to result in speedier settling of claims and better capitalisation of companies, which would increase confidence in the sector. The final number of businesses is not the most relevant variable; a more important measure is the quality and responsiveness of the resulting players. We want to maximise the ratio of firms with the financial muscle to comply and make the necessary investments to increase both penetration and their impact on the overall economy. It is very likely that this can be achieved before the set deadline of June 2020.

To what extent can changes in the regulatory framework incentivise the development of distribution channels and products?

KIPTUM: It is important to promote a variety of distribution channels. For example, micro-insurance is relevant to expand inclusivity; so far, it offers various types of packages, including life, funeral coverage, last-expense plans, pension plans and credit life. In addition, bancassurance is well positioned to replicate some of the successes that mobile banking has seen in the insurance sector.

Increased collaboration and proper regulations in bancassurance can have a substantial influence on growth, especially when they are crafted to promote consumer rights and add value. The IRA, for instance, is engaging with the cooperative movement; the Sacco Societies Regulatory Authority – which ensures savings and credit cooperatives meet the requirements to act as distribution channels – has been the key focus thus far.

Apart from regulations, awareness needs to be built for the general population to both fully understand their policies and more generally appreciate the broad positive impact of insurance on their financial well-being. This has been especially important in the agriculture sector, in which government initiatives such as the Kenya Livestock Insurance Programme, which recently made a payout to farmers, has proven useful in managing climate risks that affect crops and in bringing insurance to those communities who need it the most.

What steps are being taken to develop skills relevant to the sector and increase coverage?

KIPTUM: Since 2011 a programme has been implemented that includes providing scholarships to Kenyans interested in pursuing a Master of Science in Actuarial Management in the UK. Underwriting skills are also given priority in this programme. We expect that the combination of these key skills can directly improve the ability of the industry to properly assess and quantify risks, and allow companies to fully meet their obligations. In addition, a programme is under way to train 5000 insurance agents by 2019. This is being deployed in a wide range of counties and will set the basis for additional nationwide penetration.