Penetration and Uptake of Insurance in Kenya: A Case of Shopping Malls in Nairobi County, Kenya

A Project Report Submitted to the School of Business in Partial Fulfillment of the Requirement for the Degree of Global Executive Masters in Business Administration (GeMBA)The general objective of this study was to establish the factors that contribute to the low penetration and uptake of insurance in Kenya. The specific objectives were to examine how social aspects contribute to low insurance uptake and penetration in Kenya; to determine how low literacy levels contribute to the low insurance uptake and penetration in Kenya and to establish how lack of technological innovations contribute to low penetration and uptake of insurance in Kenya. The study adopted the explanatory research design and the population of study was 30 shopping malls in Nairobi County, Kenya. Three malls were selected for the purpose of this study. The data collection instrument was in the form of a questionnaire with both open and close ended questions. Once the questionnaires were completed and returned, they were analyzed using SPSS (v.21) after which the data was presented in table formats, charts, graphs towards addressing the three research objectives highlighted above. The study found out that there was a general lack of trust of insurance companies by the general public and poor agents integrity had led to low penetration of life insurance; poor claims management in the industry had been adversely affected by fraud arising from unprofessional conduct of players; customers had been misguided on the type of policies they should take and that insurance companies acted very slowly in processing claims. The study also found out that individuals depend on their extended families and that it was easier for them to access personal savings in case of an emergency as opposed to insurance. The study established that customers read the policies but misinterpret certain clauses; insurance products were complex legal contracts poorly understood by consumers. The study also established that there was low level of awareness and lack of knowledge of insurance products. There was a general lack of awareness, formal education helped in making financial decisions. The study found out that educated people were more likely to purchase insurance policies and goes further to highlight that insurance companies in Kenya face the challenge of limited expertise and skills amongst their workers. The study revealed that social media has been underutilized by the insurance sector in Kenya; there is lack of digitization by insurance companies which has negatively affected customer interaction in the course of a policy period; there is lack of digitization which has denied insurance companies important feedback from customers and that there was a lot of paperwork involved in processing claims by insurance companies which discouraged customers. Based on the findings the study concluded that there is general lack of trust of insurance by the general public attributed to poor agent’s integrity where agents misguide customers on policies. It was also established that lack of trust could also be due to poor claims management where customers feel that their claims are not handled well. The study also concluded that language barrier made it difficult to understand what the insurance agents were trying to explain and that the legal language used in the insurance documentation application forms was very technical and difficult to understand by the general public. People rarely heard about insurance unless it is about buying insurance or a new insurance product launch. The study further concluded that there was underutilization of social media and lack of digitization by the insurance sector in Kenya which had negatively affected customer interaction in the course of a policy period. The study recommended that insurance companies ought to invest in building customer trust by hiring well trained professionals to represent the company well and also to have a clear understanding of insurance in order to communicate well to existing and potential customers. Other recommendations are that insurance companies should work at simplifying the language used in their policies to make it easier for customers to understand; insurance companies should take it upon themselves to educate the public on insurance by initiating programs that help members of the public to have a general knowledge of insurance; insurance companies should make use of the social media to increase customer interaction in the course of a policy period and also to target potential customers. Finally, there is need for insurance companies to invest in digitization in order to reduce the manual processes that cause unnecessary delays in customer claims settlements