Insurers now targeting ‘dukas’ with digital covers

September 18, 2023

Insurance firms are now leveraging on technology in an effort to reach non-formalised business ventures with affordable covers.

Despite employing over 80 percent of the Kenyan workforce, the informal retail sector is underinsured despite a myriad of risks including business interruption, theft, and damage to property, cyber-attacks, and loss of stock.
This, coupled with the lack of a structured way of engagement has seen big insurance players shun them.

While data is sparse on the real impact in Kenya, there is an estimated 3.8 billion people in emerging markets who are left out by traditional insurance.

Despite many of these micro ventures understanding that what they have worked towards for decades could be swept away in an instant, financial illiteracy and unsuitable covers keep them from accessing key financial products that secure them from such shocks.

A survey across various micro retailers in Nairobi shows that a majority are not aware of the insurance plans for the informal businesses.

Beth Murai a trader in beauty and cosmetic accessories along Lagos road in Nairobi says that she is unaware of any such plans for small retail shops adding that the margin she makes is too small to further spend on insurance.

“We just sell whatever we can, like now business is low because people are focusing on school items at the end of the month if I’m on insurance they will be on my door to pay even if the business is performing badly,” said Murai.
Stanley Karanja, a street fruits vendor running a small stall along Loita Street says if insurance can cover losses occasioned by run-ins by authorities he would gladly accept to take one.

Micro-insurance has slowly gained interest with solutions delving into health, funeral, property, business, livestock and credit insurance.

Elijah Maina the Head of Innovations at an organisation that offers online cover says that these informal businesses can protect their profits through insurance innovations.

“Every day, informal retailers are exposed to risks that could negatively impact their businesses from loss of inventory due to fire or theft, or loss of profit due to hospitalisation,” said Maina.

In an effort to bridge this digital insurance platform mTek, and Fin, focused fintech platforms have unveiled a partnership to provide insurance covers to over 100,000 Kenyan dukas.

The partnership will drive on paperless ecosystems by mTek to facilitate the purchase of the BRITAM product, will facilitate a direct and seamless link to its network of 100,000 informal retailers and Fin will provide affordable financing for the insurance services.

According to mTek Chief Executive Officer Bente Krogmann partnerships are essential to in driving insurance uptake among the informal ventures.

“We have come together to become enablers and protectors of the informal retail sector through insurance products, contributing to the growth of Kenya’s economy,” said Krogmann.

She added that with the adoption of digital services by informal retailers, mTek’s paperless services will offer business owners accessibility, convenience, and affordability.

In the deal Informal retailers affiliated with the platform will access digital and customised insurance products starting from as low as Kenya Shilling 74 per month.

“Kenya’s economy is underpinned by the informal retail sector. The sector drives both employment and GDP. Fin is proud to do its part by providing traders within the network with a funding solution that will help them access insurance,” said Tonderai Mutesva Chief Executive Officer of Fin the financing partner in the deal.