How Artificial Intelligence Will Revolutionize Kenya’s Insurance Industry

The ability of artificial intelligence (AI) to process vast amounts of data with unprecedented speed and accuracy is transforming the insurance industry in Kenya. Through machine learning algorithms, underwriters can now analyze historical data, detect patterns, and predict future risks for any product with greater precision. This newfound insight is fast revolutionizing underwriting practices, enabling insurers to offer more personalized coverage options tailored to individual customers’ unique needs and circumstances.

Traditionally, Kenya’s insurance industry has thrived on providing cover for conventional risks such as medical, motor, fire, travel, property, and personal accident covers. Say, for motor insurance, pricing is only based on the type and age of the vehicle to be insured without regard to the driving habits or identity of the motorist involved.

Even when an accident occurs, insurance companies rely on police abstracts and a risk assessor’s report with no hindsight on verification of when the accident occurred, who was driving the vehicle, and when and where the accident occurred.

As the Kenyan insurance industry looks toward the future, it stands at the cusp of a groundbreaking revolution driven by AI that has the potential to transform every facet of the insurance ecosystem unlocking unparalleled opportunities for growth, accessibility, and efficiency.

One of the most transformative impacts of AI in the Kenyan insurance landscape lies in its potential to streamline and enhance the underwriting process. Traditionally, underwriting has been a time-consuming and resource-intensive endeavor, hindering the development of innovative and tailored insurance products.

According to the 2019 report by Genpact, 87 percent of insurance brands are now investing over $5 million in Artificial Intelligence related technologies each year.

With AI’s ability to analyse vast amounts of data from diverse sources, insurers can now make data-driven decisions in real time. This enables them to develop personalized insurance offerings that cater to the unique needs and risks faced by Kenyan policyholders. This could see premiums drop, thereby increasing insurance penetration across the country.

For many years, Kenyan underwriters have faced the daunting challenge of fraudulent claims, especially in motor-related insurance products which have resulted in substantial financial losses, ultimately eating into premiums paid by honest policyholders. AI’s implementation can be a game-changer in this regard, as it can identify patterns and anomalies indicative of fraudulent activities.

By detecting and preventing fraudulent claims, AI will create a more reliable and trustworthy insurance environment, benefiting both insurers and honest policyholders.

Customer experience is another area witnessing remarkable transformation through AI adoption. Chatbots and virtual assistants powered by AI are revolutionizing customer service by providing 24/7 support, addressing queries instantly, and guiding customers through the insurance process seamlessly.

As AI algorithms learn from customer interactions, they will continuously improve, enhancing the quality and efficiency of customer service over time. Furthermore, AI-driven analytics will equip insurers with deeper insights into customer behavior and preferences. Armed with this knowledge, insurers can develop targeted marketing strategies and deliver more relevant and valuable insurance solutions to their customers. By providing personalized experiences and seamless interactions, AI-powered insurers can strengthen customer loyalty and retention, fostering a sustainable growth trajectory for the industry.

However, the successful and faster integration of AI in Kenya’s insurance sector does come with its fair share of challenges. Perhaps the most prominent concern is the availability and quality of data. While AI thrives on data, Kenya, like many African countries, faces data limitations in certain regions and sectors. To harness the full potential of AI, collaborative efforts are required to bolster data collection and sharing mechanisms while ensuring data privacy and security.

Additionally, the widespread adoption of AI will see some insurance careers wane as AI will automate routine tasks, but it will also create new roles that require specialized skills in data analysis, machine learning, and customer experience management. Insurers must invest in upskilling their workforce to ensure a smooth transition and maximize the benefits of AI-driven innovations.

In conclusion, AI holds the key to unlocking the true potential of the insurance industry in Kenya. By facilitating personalized underwriting, empowering risk assessment, and combating fraudulent activities, AI is poised to elevate the industry to new heights. The Kenyan insurance sector must embrace AI with a forward-thinking approach, focusing on inclusivity, data collaboration, and talent development.

By doing so, Kenya’s insurance industry can not only thrive in an ever-evolving digital landscape but also play a central role in safeguarding the financial well-being of its citizens and fostering sustainable economic growth across the nation.

The writer is, David Muiruri, General Manager – Digital ICT projects & Network Infrastructure at Minet Kenya.