MR TOM GICHUI is the Chief Executive Officer of the Association of Kenyan Insurers (AKI). He sat down with SILAS NYAMWEYA to clear the air on why there is a proliferation of funeral insurance advertisements, why insurance salesmen have unkempt look, dusty shoes as well as their approach to Kenyans who are insured by the blood of Jesus Christ and those by witchcraft.
Kenyans and life insurance are rarely friends. What are usually the issues?
Like in life, you cannot be friends with someone you do not know. Awareness and knowledge of insurance is low so Kenyans are not rushing to purchase it. The stakeholders are working towards increasing this knowledge through consumer education. We are also being deliberate in making insurance easy to understand.
Some fear taking life insurance could quicken their deaths. What other cultural barriers hinder Kenyans from taking insurance policies?
Life insurance forces us to think of our immortality while general insurance forces us to think of the worst risk that could happen to our prized possessions.
We have to contend with the fact that death is inevitable. If we live our life with this acceptance, many barriers will crumble. This mindset will enable us to still take care of our dependents even when we are no longer there.
Don’t you find it amusing that some insure their cars (because it’s mandatory) but not their lives…then in case the car is a right-off it’s paid, but they are left with harambees for medical expenses?
Again, this boils down to a combination of two factors, low awareness and cultural barriers.
How does one go about making claims when hit by a government vehicle?
Some government vehicles, especially those on lease are insured and the normal claims process applies. However, we still have others that are not insured. In the event of an accident with an uninsured government vehicle, one should claim from the government through the Attorney General (AG). If the matter proceeds to court, the AG is sued and the award pronounced by the court is paid.
Why is the insurance industry so rigid. By now Kenyans should be paying in small instalments and through mobile platforms.
This is already in place especially for covers like life insurance which is long term. Insurance companies now have apps and mobile money channels where customers can make payments in instalments.
This is also applicable in general insurance and more so in the PSV sector. The premium is paid either on weekly or monthly basis. It is rare to find one taking an annual insurance certificate. Even for private cars, you will find people paying in two or three instalments. They get a monthly insurance certificate until they complete paying the full premium.
With the introduction of digital certificates, customers will now pay through these platforms and the insurance certificate sent electronically.
Some Kenyans are insured by the blood of Jesus Christ, others by witchcraft…how do you go around that?
Everyone is entitled to his or her own believes and we don’t force anyone
Most insurance salesmen have an unkempt look, but the saleswomen appear better groomed and we hear they sell more…
There are a lot of misconceptions and perceptions about insurance sales agents. Their image has greatly improved and they are very professional and entrepreneurial.
Over the last four years, women have performed better and have been recognised during the annual AKI Agents of the Year Awards (AAYA). With regard to gender parity, we are doing well at 46:54 women to men ratio.
Insurance sales people are so irritatingly persistent. What other qualities makes them tick and how come those with humble education make the best agents?
A majority of insurance sales agents are well educated and are holders of diplomas and degrees, so they know how they go about their duties.
How come insurance has no discount. Married people are more careful with their lives. That might call for a ‘marriage discount’, but so far, nothing!
Both life and general insurance have discounts. For example motor insurers offer cash back or no-claim discount should you not claim for a pre-determined period of time. However, there is a maximum discount which, once achieved, the premium stagnates.
Insurance companies are very quick in taking money from clients but paying out becomes a game of cat and mouse. What recourse does a Kenyan have?
If a claim is straight forward, an insurance company should have no issue settling it. However, where the circumstances are not clear, the insurance company must ascertain the facts before settling or rejecting a claim. Information is power, it isimportant for customers to know the details of their policy and especially the inclusions and exclusions. This will also help customers manage their expectations.
Matatus. What would be the right model for public service insurance in view of the mess in the sector?-
The model does not need to change. The key problem is claims management. The introduction of a structured compensation scheme would sort out the problem in this sector. A change in the law to apportion blame to the drivers who cause accidents would also go a long way in improving the sector.
Some insurance companies discriminate against old cars, Subarus and BMWs…what are the issues?
An insurance company will only accept to carry a risk it knows it can handle. If they feel they cannot handle the risk that comes with old carsor various models, then they are at liberty to decline insuring those risks. Each company has got their own underwriting guidelines.
Kenyans rarely insure their household goods…why
Many Kenyans live hand to mouth, so they have no household goods to insure. Lack of knowledge that home insurance exists may also be another cause.
We have however witnessed an increase in numbers though at a slow pace.
If you die in a road accident, your family can get a Sh1 million, but if it’s an air crash it goes up to Sh30 million. Why the disparity yet the victim is dead either way?
Aircrafts and motor vehicles are all insured against third party risks. The issue of amount awarded for death or injury is in most cases determined by courts of law. It is not upon the insurer to determine the amount to pay.
Some hospitals don’t accept NHIF cards for outpatient care yet it’s what majority of Kenyans can afford. How will you remedy that?-
NHIF would be best placed to respond to this.However, from where we sit, we are aware that hospitals go through an accreditation process. If a hospital is not accredited by NHIF, they will not accept the cards since they will not be paid by NHIF.
Unlike finance, actuarial science and procurement, not many students study insurance at the university. Why?
Yes the number of students taking the insurance option is lower compared to other courses. I guess this is a result of insurance not having positioned itself as an employer of choice. However, the insurance industry employs people from a wide variety of professions from accountants; actuaries; procurement professionals; PR, communications and marketing professionals; Doctors; engineers; lawyers; researchers and statisticians; Human Resource professionals; business administrators; investigators and many others.
There is this case of an agent who went under and sadly one of their clients did not know when he was liable during a car accident. What happens in such scenarios?
Agents and brokers are not insurers. They are distributors of insurance on behalf of insurance companies. The insurance contract is between the customer and insurance company, not the agent or broker. In the event of an accident where an agent is no longer in business, the customer should claim directly from their insurance company. It is therefore important that the customer ensures their premium is remitted to the insurer.
Why don’t insurance companies disclose everything about premiums. There is always that detail you overlooked which is used in fixing you?
Insurance is a contract. The parties, that is the client and the insurance company, should both be very clear about the terms of that contract. These terms are captured in the insurance policy document. Sadly, most Kenyans do not read the document in detail and therefore do not understand the contract terms and conditions. The Association together with the regulator has made considerable steps towards simplifying and standardising insurance policies for ease of understanding and making them reader friendly.
Technology has disrupted many industries but not insurance. How come?
Insurance companies are adopting technology in both internal and external processes. The pace may not be as fast as in other industries, but it is gradual. Pundits have however said that the insurance industry is poised for disruption.
Kenyans have aversion to anything reminding them of their own mortality. What has been driving funeral insurance products lately?
In 2018, AKI carried out a study on funeral practices. The key finding from that study was that the cost of funerals is on the rise and it is leaving families worse off financially. The cost is even higher if the deceased was hospitalised for a period.
Insurance has an affordable solution for this problem. With as low as Ksh100 per month, one can get funeral insurance which covers up to Ksh100,000. This will go a long way in catering for funeral expenses. This cover can be taken by an individual, by a family or even a group of people such as a chama or Sacco
Insurance is one industry that is a favourite of fraudsters. How have you tried taming that?
Indeed fraud is an issue in insurance. Information sharing will make it more difficult to defraud insurance companies. We have started with information sharing in motor insurance, which is one of the most affected. Through the Integrated Motor Insurance Database System (IMIDS), insurance companies are now able to share and access insurance history of vehicles and fraud can be detected even before its actualised. The system has saved the industry about Ksh40million so far.
Insurance ignores old people yet they need it the most…?
Quite the contrary. Insurance helps people plan for their retirement and old age through products like Pensions and Annuities. The best way to take advantage of these products is to start saving early to reap maximum benefits.
What about the requirement for medics and medical institutions to take up Professional Indemnity Insurance. How will this add value to the industry?
Earlier in the year, the Health laws were amended. It is now a requirement for every doctor to take professional indemnity insurance cover annually. It also requires that health institutions insure their staff against professional liability.
There have been several suits made against doctors and medical institutions for a variety of reasons. These law suits can be very costly to both the doctors and institutions. The costs can be in the form of legal fees, reputational damage and depending on the case outcome, fines and other penalties.
Professional indemnity insurance comes in to protect against legal costs and claims from damages to a third party arising from the performance of, or failure to perform services. It also covers unintentional breach of confidentiality; libel or slander (defamation) as well as dishonest, fraudulent or malicious acts, omissions by any former or present employee.
Having a professional indemnity cover will make it possible to absorb such claims.
Professional indemnity insurance is not limited to medical professionals. Lawyers are required by the Advocates Act to have the cover before renewal of their practicing certificate. Insurance brokers too, are required to take up professional indemnity as part of their licensing process.
Other professions including accountants, architects, engineers, advertising agents, property valuers and real estate agents, event planners, debt collectors and any other type of consultant should also take up this insurance as a safe guard.
Majority of Kenyans live in rural areas. Most have zero clue about insurance over 50 years after independence. Why is the industry so slow to spot opportunities the way Equity Bank did with banking the unbanked?
Admittedly, the insurance footprint in the country is mainly in the urban areas. The issue of awareness, distribution and affordability in the rural areas have always been cited. However, we have started seeing a shift in this with the introduction of county governments.
There are also ongoing efforts to come up with different distribution models to capture the mass market.