More than half of small and growing businesses in Kenya are uninsured with owners blaming it on the high cost and lack of tailored policies.
The survey by business consulting services firm WYLDE International and AAR Insurance Kenya shows that 59 per cent of business owners have no plans to purchase business insurance in the foreseeable future, raising concerns over the push to grow insurance in the country.
This coming at a time that 53 per cent of small and growing businesses lack insurance.
The report titled Insurance Usage & Awareness Survey Pulse shows more than half (58 per cent) of business owners say that insurance companies do not understand the needs of small and growing businesses.
AAR Insurance Kenya Group CEO Justine Kosgei said that despite the availability of various insurance products, the uptake among small and growing businesses (SGBs) remains relatively low.
“Only 47 per cent of SGBs currently have active insurance policies, with property and motor insurance being the most popular,” said Kosgei.
The findings further show that small and medium businesses in Kenya are more likely to insure their property and assets than take up health cover for their employees.
This is evident by the kind of policies that are in demand by these businesses.Top policies that most of the firms have taken up are property, motor, and fire, with health coming in at fourth place and burglary insurance closing the top five.
A majority of the businesses cited rising costs of premiums, which many businesses find unsustainable amidst an already challenging economic environment.
Additionally, the perception of minimal return on investment and slow claims processing has further dissuaded firms from investing in insurance products.
This is despite a majority of 74 per cent of business owners, including those without an active policy, believing that insurance is important for running a business, with 44 per cent of them considering it “very important.”
Only 16 per cent of SGBs are considering new insurance coverage in the near future, underlining the need for affordable and customised products tailored to their unique challenges.
“High insurance costs and a perceived mismatch between offerings and SGB needs are significant barriers. However, digital tools and portals are increasingly used, and 83 per cent of business owners report positive experiences with insurers,” reads the report in part.
From the firms that have taken up insurance, 52 per cent of businesses rely on a single insurance provider, while 43 per cent engage 2-3 providers.
Risk management emerged as the leading motivation for insurance uptake, with 67 per cent of business owners citing it as their primary reason for purchasing coverage.
In contrast, 16.7 per cent of respondents said they were compelled by legal requirements, and 14.3 per cent indicated they sought insurance for peace of mind.
However, the survey also underscores significant challenges facing the sector. Cost was identified as the biggest barrier to insurance uptake, with 60 per cent of business owners stating it as their main concern.
“So when you ask them, why
would you buy insurance, or why
have you bought insurance in the
past? 67 per cent say it is because
they wanted to manage their business. So again, you can see there’s
a high appreciation of risk management and insurance as a tool to
manage that."
