A recent survey conducted by WYLDE International and AAR Insurance Kenya reveals a concerning trend among small and growing businesses (SGBs) in Kenya over half of them remain uninsured. The survey highlights key barriers, including the high cost of premiums and a perceived mismatch between insurance products and the unique needs of small businesses.
The report titled Insurance Usage & Awareness Survey Pulse found that 59% of business owners have no immediate plans to purchase insurance, and 53% of small businesses are currently without coverage. This is particularly troubling at a time when insurance growth is seen as a critical element for economic stability and security in Kenya.
A significant 58% of business owners believe that insurance companies fail to understand the distinct needs of small and growing enterprises. This mismatch is further exacerbated by the rising cost of premiums, which many business owners find unaffordable amid the already difficult economic landscape. According to AAR Insurance Kenya Group CEO Justine Kosgei, despite the availability of a range of insurance products, uptake among SGBs remains low, with only 47% of them holding active policies. Property and motor insurance are the most commonly purchased policies, while health insurance for employees ranks fourth in demand.
While a majority of business owners (74%) acknowledge the importance of insurance in business operations, only 16% are considering purchasing new coverage in the near future. This highlights a growing need for affordable, customized insurance products tailored to the specific challenges faced by small businesses. Many businesses are particularly concerned about the perceived slow claims process and low return on investment, which contribute to their reluctance to invest in insurance.
The survey underscores that risk management is the primary motivator for insurance uptake, with 67% of business owners citing it as the key reason for purchasing insurance. Despite this, cost remains the biggest hurdle, with 60% of respondents identifying it as their main concern.
Interestingly, digital tools and portals are playing an increasing role in insurance transactions, with 83% of business owners reporting positive experiences with insurers. However, the report suggests that the sector still faces significant challenges, and a tailored approach with affordable options could significantly improve insurance uptake among small businesses in Kenya.
As the push to grow insurance coverage continues, understanding the unique needs of small businesses and addressing the high cost of premiums will be crucial to improving the insurance penetration in the country.
