This report sketches an insurance innovation portrait for Kenya, as part of an eight-country study to determine what regulators can do to unlock innovation at scale to meet key insurance needs in sub-Saharan Africa.

A large and diverse market. Kenya has the fourth largest insurance market penetration in Africa. The market spans 56 insurance companies, 5 reinsurance companies, 12,708 intermediaries and 376 insurance service providers skewed towards the general insurance market. Compulsory lines, such as third-party motor insurance, play a prominent role in the market, as does corporate-based general, life and health insurance.

Limited retail reach. The National Hospital Insurance Fund reaches 23.4 million Kenyans. Beyond that, retail insurance market reach is limited, especially for rural women and MSMEs.

Numerous innovation efforts, but not yet paying off at scale. The insurance uptake gap signals an innovation gap and trap. Kenya has a history of a drive for inclusive insurance innovation, with numerous microinsurance, index insurance and m-insurance pilots over the years. More recently, there has been increased emphasis on the role of insurtechs to drive insurance digitalisation. Overall, however, the market remains conservative, and innovation is not yet part of the core market fabric. New tech players among other factors[1] struggle to access funding and secure viable partnerships, while insurers remain subject to distribution and premium collection challenges in reaching beyond the high-end retail and urban market.

A largely enabling environment, but gaps remain. An assessment of the innovation enabling ecosystem shows that:

• The underlying electricity and mobile network infrastructure is a boon for innovation in Kenya, but challenges in deepening and modernising financial market infrastructure remain.
• Access to technical insurance and science, technology, engineering and mathematics (STEM) skills remains a constraint to innovation.
• Insurance awareness and trust need to be built further.
• Effective partnership formation remains a key challenge, especially for new players (i.e. insurtechs) seeking a foothold in the market.
• The regulatory environment is largely enabling. There is a growing regulatory focus on access, usage and quality of insurance services. Recent introductions of a microinsurance licence category and provisions for remote/digital distribution are also a case in point.
• The Insurance Regulatory Authority (IRA) has taken positive strides in enabling insurance innovation through proactive industry engagements, accelerator programmes and a regulatory sandbox, and has streamlined its internal processes to be more responsive, strategically, to innovation.

[1]        Other challenges faced by new tech players include innovative business solutions especially in product development, use of massive data sets available, underwriting, pricing risk and distribution of insurance products.