By Oscar Onyango
The purpose of insurance is to neutralise or mitigate the fear of financial ruin. In Kenya, the youth form the majority of the population, and therefore for insurance market players to ignore this important segment amounts to self robbery of huge financial returns and is no doubt a slow poison on the future health of insurance market. The brutal honesty is that the future survival of the insurance market is highly dependent on the approach given to the market presented by this youthful population. With competition from the numerous bank products targeting the youth, insurance market players must develop more aggressive and proactive strategies in tapping the market presented by the enormous youthful population. The first step is to create awareness since it has been established that lack of information on insurance is the main course of youth apathy towards the uptake of insurance.
After carving out the segment of the youthful population for which the market players are desirous of reaching, for instance the college going youths of the age between 18 to 26 years, the regulator should embark on an aggressive outreach campaign. However, we must appreciate the fact that young people are difficult to reach through traditional channels, and market players will have to adopt modern and attractive ways of capturing the attention of the youths in regard to insurance products. Education-based promotion is one way of doing it. It involves programmes where students who perform well in courses relating to insurance, are incentivised through scholarship or even internship opportunities by the Insurance Regulatory Authority and firms.
Another way of passing information on insurance could be by tying in insurance information on popular sites such as Twitter and Facebook which are frequented by youths, and also organising workshop as well as promotional concerts from where youths can be encouraged to take up insurance cover by issuing instant rewards to those who take up policies at such events.
The second part is to remove the hindrance or barriers that discourage youth involvement in insurance matters. We can all agree that the impact of mobile phone applications has been revolutionary. It then follows that market players cannot afford to overlook the need for mobile phone applications in reaching out to the youths, whose appetite for instant and readily available information placed in one package is nearly insatiable. Let’s consider the Nairobi Stock Exchange, which that has developed a mobile phone application that makes it so easy to get information on the listed companies, and how they are trading in the capital markets. The advantage of this is that those interested in purchasing shares are in a position to assess the listed companies in terms of their future prospects and are therefore in a position to make informed decisions. This would make a turning point in the insurance market if information on the insurance companies can be made available to the public in regard to their status, whether registered or not, and the products they offer. The main point here is that the availability of such information would mitigate if not diffuse the sceptical and laid back attitude that youth hold on insurance, while at the same time opening up new markets in the rural areas from which, for long, the insurance companies have shied away.
The Insurance Market is an endangered market today with the aggressive and seemingly never ending encroachment of banks willing to offer the insurance products with the only barrier being the legal instruments at hand – the Banking and Insurance Acts. These outlines the various responsibilities of these the two institutions and it is for this reason that the banks have sought to work in partnership with the insurance companies – more as agents rather than providers. It would only take the reworking of the Banking Act by incorporating provisions that allows banks to offer insurance products and services to pronounce the final death sentence on a number of the insurance companies!
Fuse with banking
Besides the campaigns and awareness creation of insurance to the youths, market players must not overlook the need to inculcate the culture of saving among the youths. Youth must be made to appreciate the beauty and importance of saving because it’s only by doing this that information on insurance would make sense to them. The regulator can achieve this by reworking the insurance laws to widen the scope of products that insurance firms can offer. This is to mean that the firms should be allowed to innovate and offer products that have huge traction for this segment. Indeed youths are expense-conscious individuals who will only part with their meagre income unless it is for a highly attractive alternative.
It is high time insurance market players considered taking up some banking roles on a reduced scale. This can be done by coming up with insurance policies that have heterogeneous aspects of banking and insurance in one package. For instance, most youths would be interested in insuring their phones and laptops among other accessories against theft and vandalism. It is almost impossible to convince young people to pay premiums where, should the risk fail to occur, they are entitled to nothing. But to tell them that they can pay a premium and be entitled to say half the total they pay would be very appealing.
The advantage of such a policy is twofold; first, it reduces the temptation of making false claims with the desire of having a new item through compensation since it presents a win-win situation for both the insurer and the insured. Secondly and most importantly its makes the insurance company a banker for the youths through a ploughing back mechanism.