Insurers – are they a friend or foe?

By Jeremy Clayton

I arrived in Kenya nigh on 5 years ago and it was very apparent, early on, that there was a lack of confidence in the Kenyan insurance market. Insurers didn’t trust Brokers, clients didn’t trust Brokers and Insurers didn’t trust policyholders! Simply, the worst scenario that an industry could experience and as a result, many owners of businesses or houses just didn’t bother to insure, with the comment ‘what’s the point, I’ll never get paid out!’

So, our project at the JW Seagon Group was to re-build confidence in the market. JWS has been extremely successful providing Healthcare solutions for our clients, generally using International ‘players’. Our thinking on General insurance was, if International Insurers can do it on Healthcare, why can’t local Insurers do the same on General insurances?

Well, the truth of it is they can and in fact, they have been! I hear some of you throwing your arms in the air and proclaiming, ‘not me, I didn’t get paid’ or ‘not me, they only paid 50% of my claim’. Let me deal with both points, and of course, I am generalising here as I do not know all the circumstances.

Firstly, Insurers may repudiate a claim where the loss or damage is specifically excluded, the Policyholder has breached some condition, or, perhaps the premium hasn’t been paid or passed on by the Broker! It isn’t common, but we do realise, it does happen. What’s the answer? Simple, ensure that your policy is comprehensive, exclusions are minimal, comply with the conditions, pay your premiums and understand what you are buying. As many of you will know, JWS has designed bespoke policies for our clients and these have proved to be extremely successful and we are pleased to say that all our clients have not faced the ‘it’s not covered’ retort.

The second issue, the reduced claim payment, is something that is mainly down to the Policyholder. There is a condition under the majority of insurance policies covering assets, which is known as ‘Average’. It is very simple – your asset costs KES ‘X’ but you only insure it for KES Y’ which happens to be 50% of what it should be. In this case you will only get 50% of any claim made. So, KES 20m to rebuild your house and you only insure it for KES 10m, if you have a kitchen fire and the replacement is KES 2m, you will only get KES 1m (50%).

Some of you may feel this is unfair, but it is a basic principal of asset insurance, has been around ‘forever’ and is how claims are handled. A Policyholder must not blame an Insurer for them not taking responsibility to insure their property adequately.

At JWS, we are trying to ‘educate’ our clients to ensure that they insure adequately and we have produced documents previously, including a guide under our ‘Sleep Easy’ plan which is provided to enable our clients to complete the values to arrive at a replacement cost. This is really only designed for personal contents and in respect of buildings replacement costs, we have recommended professional valuations are obtained to set the correct sum insured. Of course, this is time consuming and an expense that we could all do without.

As such, we have been in touch with several organisations within Kenya and we have been able to obtain a ‘guide’ as provided by the Institute of Quantity Surveyors in 2016. This guide is used by many local Insurers and so we suggest that it is a reasonable indicator to go by. We have up-dated the figures with inflation plus added professional fees that you would incur, and the figures are as shown in the guide. Please be aware, it is a guide and the responsibility for the accuracy of your sums insured is still your responsibility.

We hope it will provide some assistance to you and that our clients will feel that their Insurers are a ‘friend’ not a ‘foe’.