Technology driven disruption within East Africa’s insurance industry

The insurance industry has lately featured in East Africa for all the good reasons; growth, growth, growth. With the prospects of better times to come, the stakes have risen and to continue to rise. Question though is what the future looks like and what new business models will emerge.

The truth is that the growth will not cease in the near future and things will just get better. Whereas insurance penetration in Kenya stands at around 3.2%, Uganda and Tanzania are well below the 2 per cent mark. It’s not hearsay or a rumour that a wave of disruption is taking shape across the continent with regard to the insurance industry, especially within East Africa. Whereas there’s been a historical “bad tag” perception about insurance, the views are changing. There’s a growing appreciation across board that Insurance is indeed the best protector of our most valuable assets and it’s a “must have” financial instrument. The growing appetite of Life Insurance and Micro-Insurance products is a true testament of this growing users’ awareness. The maturing of the regulatory environment is also playing a key role in regularizing and normalizing the insurance sector in a bid to promote level playing ground and promote best practices. The entry of multinational insurance players into the Africa market is also challenging existing status quos around how business is executed, thereby resulting in a thriving competitive environment.

All said and done, the largest disruption will occur in how fast the insurance sector is able to adopt to or adapt emerging technology opportunities, especially within the internet and mobile spaces. UK is the best case study of technology’s potential to cause disruption beyond measure within the insurance sector. Whereas the UK market was primarily a broker driven market up until the early 2000s, it didn’t take long before new technology driven business models emerged that eventually commoditized insurance. The resultant was insurance available everywhere and at competing prices. What followed was a hive of activity around new distribution channels, operational innovations and lean back offices within the insurance sector. With East Africa experiencing one of the highest mobile and internet penetrations across the globe, it is poised to be a breeding ground for new ideas and innovations around the insurance industry, especially from a distribution angle. Whereas the Innovation ground ripened earlier for some sectors like banking and telcos, the insurance industry is speedily embracing emerging technological opportunities. Looking ahead though, I predict that East Africa’s mobile and internet revolution will not only cause a huge disruption around the Insurance industry, but will also trigger a full scale paradigm shift around how Insurance is distributed and serviced.

(The writer, James Muritu is the Group IT Head, Jubilee Insurance. This piece was first published on LinkedIn).