Assessing the Demand for Microinsurance in Kenya

Publication Date: Jun 2002
Published by: MicroSave
Document Type: Paper

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Does micro insurance help the poor in coping with risks?

This study identifies the most common risks faced by low-income households and their coping strategies to assess the potential demand for microinsurance in the rural and urban areas of Kenya. It aims to:

• Serve as a guide for designing microinsurance products,
• Suggest the most appropriate microinsurance products to mitigate risks effectively.

• Are prone to several risks that directly affect the level and/or sources of income and their productive assets,
• Are more vulnerable to risks due to small asset base,
• Have limited support from the formal insurance sector to manage such risks,
• Have several strategies to manage risks and crises in their households,
• Have some recognition of the need and importance of forward planning that could assist them in mitigating the effects of risks,
• Lack a sound understanding of microinsurance concepts or its advantages.

• Intangibility of insurance products for clients,
• Difficulty in understanding the terms, conditions, and limitations of insurance products,
• Lack of good customer service by insurance providers,
• Need to fix the cost of premium in a way that balances affordability (to low-income clients) and profitability (for the insurer),
• Need to match premium outflows with seasonality of incomes,
• Need to create a niche for microinsurance institutions.