Government Considers Expanding Mandatory Insurance

The government plans to change compulsory insurance costs in a bid to strengthen the local underwriting industry. The new proposal is contained in the final draft of the National Insurance Policy, which was published on Monday, and is aimed towards strengthening the policy, legal and regulatory environment of the insurance industry in Kenya. The implementation cost of the policy document has been priced at Ksh.11 billion.

“The insurance companies in Kenya have largely relied on traditional products and taking on relatively conservative risks for their insurance portfolios. There is a need for the government to play a proactive role in developing policy that supports the access and uptake of insurance,” read the policy document.

The new policy pushes for cost reduction and enhanced customer experiences through the adoption of technology. It also pushes for new specialized insurance products and services such as an expansion of social insurance programs to cover aspects such as employment as well as introducing covers against the adverse effects of climate change.

Currently, only motor cover vehicles are mandatory where driving without at least a third-party cover is illegal. Implementation of the policy would reduce the greater price-based competition in the industry and ensure that underwriters do not remain stuck to traditional products and would increase the access and uptake of insurance.

The policy was initiated by the National Treasury together with the Association of Kenya Insurers (AKI), the Attorney General, Central Bank of Kenya (CBK), and the Association of Insurance Brokers of Kenya (AIBK).

By Fatiha Shabir