Back to drawing board: Revisiting insurance industry’s dismal penetration in Kenya

Today in Business Talk in the Business Daily, we continue our 2025 deep dive into the Kenyan health insurance sector as an update to our extensive 2021 expose.

In interviewing policy owners, they recount muddled product descriptions that initiated long-term doubts about what they purchased.
Never seeing their comprehensive policy documents with all the inclusions and exclusions.

Brokers looking for new customers rarely revealed the behind-the-scenes conditions in sufficient detail. The technology revolution tends to appear surface-level cosmetic in the insurance sector rather than revolutionary.

Patients who depended on medical benefits often found themselves stuck in a complex system where it took monumental effort just to get the promised benefits.

Many Kenyans proclaim that even with health insurance coverage, they still feel unprotected against catastrophe.

As a cancer survivor myself, this author remembers sitting in my hospital bed in Nairobi in 2019 after my initial major surgery and I was more fearful of how I would pay the bills than how I would recover. During my hospitalisation, my health insurer came to visit.

But their visit did not stem from a benevolent concern about my welfare, instead for them to come and lie about my coverage and to be told I was being cut off from further claims.

If my surgery had not been successful, I would have died because I would not have been able to afford follow-up surgeries. After the insurer cut me off prematurely, my colleagues at USIU-Africa held a harambee to help pay my medical expenses. I am still eternally grateful to have such amazing colleagues. But in reality, I had health insurance and should not have been forced to rely on others.

Here in Kenya, our system works differently and serves a separate purpose than other countries, such as the US.

While America and all its insurance drama hardly serves as a good model, what it does do, ever since President Obama passed the Affordable Care Act in 2010, is protect Americans against calamity.

American health insurance does not start paying any claims at all until one pays an average of the equivalent of Sh1 million. Then, it offers nearly unlimited coverage. So, a heart transplant, cancer, a major road accident, etc. all could cost over Sh100 million for effective treatment.

But here in Kenya, our health insurance covers all the nitty-gritties around what is essential and basic of relatively small day-to-day health issues with minimal expenses coming out of our personal pockets until we reach our maximum.

Read: Revisiting insurance: Industry’s dismal penetration rates in Kenya cause for alarm

However, largescale health challenges often require stacking multiple health insurance covers if available, selling property, fundraisers, and obtaining loans.

Sadly, in Kenya, being ill often pushes us into or closer to poverty. Covering 100 percent of small bills and not being available for later massive bills is one of the reasons insurers often give for Kenya being unique in that it requires full upfront annual payment for health insurance instead of monthly payments like much of the world.

Perhaps we should categorise two types of health insurance in Kenya for our market. Health insurance that works as it does now, covering the full costs for the first expenses incurred up to our Sh500,000, Sh1 million, Sh5 million or whatever our maximum.

Then, a second “catastrophe insurance” that covers nothing until a certain threshold is reached, then covers everything above that. So, we would not have to worry about losing our homes or our children’s education if we, heaven forbid, have a calamity of a health issue.

Also, Kenyan insurers are also notorious for delayed payments to medical establishments. Bureaucracy stands on top of bureaucracy.

Many medical providers prefer to accept global insurers like Cigna, Blue Cross, and Bupa Global rather than our own home-grown insurers.

The reasons quoted by medical service providers involve less paperwork, faster turnaround, and less claim rejection from the foreign insurers. But why do foreign health insurers treat Kenyan medical providers better than our own Kenyan insurers? This is shameful.

Sensing the mounting frustration and ineffective health insurance penetration, some individual clinics and chemists are now creating insurance look alike schemes claiming “health coverage”, “inclusive coverage”, “no waiting periods”, or “health benefits trading”.

While these seem like insurance terminology, they essentially take prepayments for future medical expenses, yet often give confusing run arounds on their websites and customer service operators claiming one is “covered”. We Kenyans are desperate for alternative solutions to the health insurance crisis, but let us not get fooled by promotions that seem too good to be true.

Insurance Regulatory Authority should clamp down and only allow certain terms to be used in advertising by registered insurers just the way the Central Bank does not allow non-banks to utilise banking terminology.

The sector, both insurers and regulators alike, needs to sit and listen to its customers. Experience the impressions and perceptions of health insurance users. Go through the frustration of dealing with ineffective brokers. The Chandaria Foundation, Dalberg Design, Growth Africa and others here in Kenya provide training through various partners on the entrepreneurial concept of design thinking.

Design thinking, anchored in deep empathy for user needs, embraces iterative exploration of doing what Stanley Gichobi famously says, “delights customers”.

Further, continuous experimentation must happen along with rigorous testing and strategic refinement of solutions so that each customer interaction receives a thorough evaluation for functional fit, aesthetic appeal, and overall satisfaction.

If insurers would send their product developers and customer service team leads to such training, then hopefully the sector may realize measurable improvements in consumer confidence and loyalty.

Have a management or leadership issue, question, or challenge? Reach out to Dr Scott through @ScottProfessor on Twitter or on email [email protected]