NAIROBI, Feb. 27 (Xinhua) -- Kenya is to give an official go-ahead to insurance companies and other investors to start selling low-cost insurance products as the country seeks to increase the number of its nationals covered by insurance policies.
Kenya's regulator Insurance Regulatory Authority (IRA) said on Tuesday that it is holding consultations with all the stakeholders following successful development of the proposed law to guide the establishment of low cost insurance companies known as micro insurance.
"The laws that we have proposed are based on the best global practices on microinsurance," said Godfrey Kiptum, the Chief Executive Officer of the IRA during consultations with the industry at the Kenya's College of Insurance in the capital Nairobi.
Kiptum called on the industry to prepare to offer Kenyans affordable insurance products that meet their most relevant needs.
He said insurance companies must change their perception to accommodate the needs of low income earners who are expected to be the main buyers of low-priced insurance products.
"The insurance industry in Kenya is still very traditional and rigid in its practice. We need a paradigm shift," he said.
Statistics by IRA show that insurance industry in Kenya contributes 3 percent to the national economy every year.
Although this is the highest contribution in East Africa, with the rest of economies gaining less than one percent from the industry, it is still seen as low as because in markets like South Africa, insurance contributes 14 percent to the economy.
He said companies venturing into micro insurance must get out of conventional thinking and invest in high level of innovation to create the best understanding of the new market.
The proposed law comes just days after President Uhuru Kenyatta committed to register about 26 million Kenyans to the National Hospital Insurance Fund (NHIF) from the current seven million Kenyans, as part of his legacy of providing universal health insurance.
The insurance regulator in Kenya has also proposed regulations to guide banks that sell insurance products under what is known as bancassurance.
Kiptum said one of the key concern the proposed law addresses is the complaints that banks are forcing clients who take loans with them to take insurance from the same banks.
"Kenyans must be given a right to choose and therefore the proposed regulations prohibit banks from insuring loans to their customers," said Kiptum.
But he said the prohibition is an optional measure if the banking industry can come up with a proposal that will help to end this aspect of clients being forced to take credit insurance by banks.
