The COVID-19 pandemic has forced insurance companies to embrace digitization and automation

NAIROBI, Kenya: The COVID-19 pandemic has had severe impact on businesses worldwide. A 2020 World Bank report on COVID-19 Business Pulse Surveys on micro, small, and medium enterprises (MSMEs) in developing countries, indicated that sales fell for about 84% of firms in developing countries. Micro and small business enterprises sales declined by 50% or more while large firms sales declined by less than 40%.

To sustain operations, business enterprises have made tough decisions. For instance, some of the business owners have had to shift from a comprehensive motor insurance cover to the third party option, while others have had to adjust their individual life insurance cover following the loss of income. Insurance Regulatory Authority (IRA) 2020 annual report recorded depressed growth for life insurance companies, which grew by 4.5% compared to 11.9% the previous year.

For decades insurance has been used as a risk management tool and as part of disaster recovery plans with business owners using it as a measure against eventualities. With the COVID-19 pandemic, small and medium sized enterprises are grappling with balancing between insuring their business or being at the mercy of situations that may arise.

Business continuity is key for all entities especially when disaster strikes. A simple case of negligence in a factory setting may result to a fire that endangers life and destruction of property. In the case of an SME, the business owner will face certain challenges such as medical expenses. The future of the business may be at risk, having a ripple effect for the workers relying on the entity for an income. However, with insurance in place business owners are able to manage their risks, because they will have access to medical care or compensation for damages. This means survival and continuity for the business with no financial constraints.  

It is therefore important that business owners understand the value of insurance and in particular compensation in case of an accident. In an instance where there is an accident within a business premise and visitors or customers are injured, we have an insurance option referred to as public liability. This avoids a situation where the business owner has to cover for medical expenses and liability as well as reputation damage following a lawsuit seeking compensation by the affected parties.

The government has played a major role to encourage the uptake of insurance. For instance, insurance relief forms part of tax reliefs in Kenya. This is under Section 31 of the Income Tax Act, which allows insurance relief on premiums paid for life insurance products by individuals. These life insurance products include education, investment and pensions.  The relief serves as an incentive, reducing the amount of tax one must pay monthly.

The COVID-19 pandemic has forced insurance companies to embrace digitization and automation. That has led the insurance industry to become innovative in capturing new and untapped markets to ensure that all individuals and sectors of the economy are well covered.

CIC has in place a senior’s medical cover to cater for a workforce aged above 60 years, or entrepreneurs and business owners over 60 years. In addition, with a great percentage of Kenyans working from home, the CIC Dawa Mlangoni product sees that patients have their prescribed medicine delivered to their homes or offices.

The company has also invested in mobile applications and portals to make insurance products accessible through the mobile phone and other technology devices. The objective being to make insurance inclusive and accessible to majority of Kenya’s population, including micro small and medium enterprises.

The writer, James Kamiri is the General Manager – Marketing and Customer Experience – CIC Group


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