Factors Influencing Penetration of Micro-insurance in Kenya

Abstract

The need for enhanced access to insurance at affordable rates to the lower end of the market is well set out in the Kenya Vision 2030 and other government policy documents. The need for insurance services is important for low - income groups as they are more vulnerable to ill - health or death, unexpected expenses, and natural disasters. Consequently, there is need to reach to this group and mitigate their level of ris k since when it occurs, it is bound to drive them to deeper level of poverty. To bridge this need, insurance firms have developed products that target this section of the market. However, several challenges are affecting the success of rolling out the prod ucts into the insurance to the market. This research sought to establish factors influencing penetration of micro - insurance in Kenya. The research adopted a descriptive research design whereby data was collected using a self - administered questionnaire tha t was distributed to 24 senior and middle level managers at the tagerted insurance firms. The study found that a range of products were being offered under the micro - insurance products which targeted agriculture and livestock farmers, personal accident fo r students on attachment, loan insurance for small traders, health products. The payment mode for the insurance premiums was majorly through Mpesa. The factors that affect the micro - insurance penetration is the low level of income among the target market, perception that insurance process is generally complex by the target market and limited distribution channels and branch networks of the micro - insurance providers in Kenya. Since, the basis of the research was based subjective evaluations by the senior ma nagement, the findings might have elements of subjectivity considering that they will be involved in implementation of the strategies targeting more coverage of the micro - insurance products. Because of the limited knowledge on the insurance products, there is need for a rigorous and well coordinated education on insurance to be offered to the target market and this will rope in the support of donors and the central government