Industry experts have warned that inefficiencies and the failure to maximise returns from digital investments could derail the insurance sector’s transformation agenda, even as Kenya and other African countries work to boost insurance uptake.
Kenya’s insurance penetration remains low, ranging between 2.2 and 2.7 per cent of GDP, well below the global average of about 7.4 per cent.
Across Africa, insurance penetration averages between two and three per cent, with South Africa standing out as the only major exception, recording rates above 11 per cent. Most countries on the continent continue to experience limited insurance coverage.
Analysts attribute the low uptake to constrained disposable incomes, weak savings habits, and public scepticism fuelled by complicated insurance products and delays in claims settlement.
Although insurers have invested substantially in digital transformation over the past decade, sector leaders say many firms have yet to unlock the full value of these investments. Revenue leakages persist across key operations, including underwriting, claims management, distribution, and customer service.
Speaking during an InsurTech forum in Nairobi, Deloitte East Africa Partner Timothy Machira said the sector’s greatest hurdle lies in execution.
“Many organisations have robust strategies and ambitious transformation agendas, but the challenge is converting those plans into measurable business results,” he said.
Insurance firms continue to face challenges such as expensive customer acquisition, low market penetration, fraud, cumbersome claims procedures, and poor customer retention.
Experts noted that technology alone cannot address these issues unless it is strategically applied to solve customer challenges and improve overall business performance.
Apollo Investments Limited Group CEO Ashok Shah observed that the industry is entering a new era shaped by artificial intelligence, data analytics, and digital innovation. However, he cautioned against adopting technology without a clear purpose.
“The future belongs to organisations that balance innovation with a strong understanding of customer needs. While technology creates opportunities, long-term growth depends on solving genuine customer problems and building trust,” Shah said.
Participants at the forum also raised concerns about the industry’s emphasis on activity-based metrics rather than value creation. They called on insurers to focus on indicators such as profitability, customer lifetime value, claims efficiency, retention rates, and returns on technology investments.
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According to industry experts, insurers continue to lose considerable revenue through fraud, inaccurate risk assessment, manual processes, and fragmented data systems. Artificial intelligence is increasingly being viewed as a tool capable of reducing these losses while enhancing operational efficiency.
The use of AI-driven underwriting solutions, fraud detection technologies, and automated claims processing is expected to help insurers cut costs and deliver better customer experiences.
ICEA Lion Group CEO Philip Lopokoiyit said end-to-end digitisation of the insurance value chain offers one of the sector’s strongest growth opportunities.
Industry leaders say digital solutions can streamline processes from customer onboarding and policy issuance to claims settlement and after-sales support, enabling insurers to reach wider markets while lowering operating costs.
“The organisations that thrive will be those that leverage data, digital capabilities, and AI not only to automate operations but also to gain deeper customer insights and improve service delivery,” Lopokoiyit said.
The rise of digitally connected consumers across East Africa is also opening new opportunities for insurers to develop more relevant and affordable products.
Sector leaders believe technology-driven distribution channels can extend insurance services to underserved groups, particularly young people and small enterprises.
However, experts warned that increased reliance on data and artificial intelligence introduces new risks. They urged insurers to strengthen governance structures, safeguard customer data, and adopt ethical AI practices to maintain public trust and meet regulatory requirements.
