According to the Insurance Regulatory Authority (IRA), only 7% of Kenyans have any kind of insurance. In a population of 43 million, the uninsured 93% add up to about 40 million Kenyans.

Given the recent and ongoing introduction of low-cost insurance schemes, you would think there would be more policy holders. With pocket-friendly packages like the Mbao Pension Plan and CIC Insurance’s Afya Bora, some people would assume that all is well.

CIC even went one step further to unveil Nuru Ya Jamii, a house insurance package with deposits as low as KES 480 a year. If that’s not enough UAP has its Salama Sure package which only asks for daily deposits of KES 7. So what’s the problem?

Poverty

Even as the government pushes for transparency within the sector, many Kenyans are yet to feel the difference in policies. The International Fund for Agriculture Development (IFAD) reports that 79% of the country’s population lives in rural areas and depends on agriculture for most of its income. Some have even been slow on the uptake with pastoral communities in Marsabit accounting for only 2500 insured parties in the livestock sector.

This is surprisingly minimal considering agriculture is responsible for 30% of the country’s GDP. According to Price Waterhouse Coopers (PWC), the sector also accounts for 45% of government revenue and 80% of national employment.

All this is achieved while managing to feed a nation and contributing more than 60% of the country’s total export earnings. Don’t believe it? Then where do you think your Sukuma Wiki and Ugali comes from?

What’s surprising is that most farmers are living from hand to mouth. Only large scale agriculturalists and major corporations often beam with pride during most harvest seasons.

On the other hand, insurance companies have been accused of keeping secrets from their clients. The government thinks that the public has a right to know what these service providers are doing with their clients insurance.

“We are preparing four sets of guidelines to respond to the various challenges that have faced the insurance industry which have impacted negatively resulting to low penetration of insurance in Kenya,” said IRA CEO and Commissioner, Sammy Makove.

This was a mere two weeks before NHIF even announced their funding. Even now, the insurance sector is making promises that they can just barely deliver.

Makove said that the IRA had been receiving complaints from consumers about slow response time and a lack of transparency in claims payments, irrelevant insurance products and professionalism.

The IRA has since mentioned that the public is not satisfied with the insurance products available in the market. The Authority also notes that the sector is riddled with poor pricing and inadequate disclosures on vital information.

Working Progress

Meanwhile, the National Hospital Insurance Fund (NHIF) recently buckled under the pressure of the low-cost insurance boom. Minister for Medical Services, Prof Anyang’ Nyong’o was among the first to point out that the Fund did not have the capacity to cover every single policy holder. When something is cheaper than it usually is, someone else is definitely footing the bill. In this particular case, NHIF was beginning to feel the pinch of 700,000 policy holders in the field of medical insurance alone.

Lucky for Kenyans that he Rockerfeller Foundation recently sponsored NHIF with KES 23 billion to roll out a health policy for the poor. According to the Ministry of Medical Services, the forthcoming package will include free general consultation, medication, X- rays and laboratory tests. The Fund reports that 28% of healthcare payments are paid like bills instead of insurance packages.

The move, dubbed NHIF Health Insurance Subsidy Programme will also extend its services to include diabetes, asthma treatment, HIV, clinical counseling and treatment of ear, nose and throat infections.

The Fund, in conjunction with the Ministry of Medical Services, plans to launch a pre-emptive version of the initiative sometime next month. The service will be available in both public and private hospitals. The Ministry is set to officially roll out the service in two phases. The first phase is set for February 2013 while the second one has been scheduled for July.

This comes shortly after the IRA unveiled a proposal to regulate low cost insurance. Speaking during the official announcement for the initiative, Board Member, Moses Obonyo said that the new policy would serve as a framework for service delivery in the insurance sector. He noted that Kenyans desperately needed micro-insurance.

Only Time Will Tell

“Our aim is to build a better, stronger and more stable insurance sector that will give more confidence to the consumer and empower insurance companies and their intermediaries to deliver more relevant, affordable and creative services to their customers,” said Makove.

It is doubtful whether Kenyans are actually waiting with bated breath for such a revolution to occur. When it comes to government promises, the results are often less fantastic than anticipated (500,000 new jobs, anyone?). You can always cross your fingers and hope for the best. This one looks like it might actually pass the test. Only time will tell.