Statistics from the central bank indicate that the local insurance sector continues to register considerable growth in terms of total assets and capitalisation.

However, this growth has not been replicated in terms of penetration levels as the country lags behind regional peers. For instance, penetration levels in Kenya stand at 3 per cent and the Africa average at 2.8 per cent. 

On the other hand, Rwanda’s insurance uptake has stagnated at just 2 per cent, forcing government and market players to find ways of encouraging Rwandans to take up policies and safeguard their businesses and properties and hence increase rate of penetration. Industry experts have for long attributed the low policy uptake rate to lack of innovation, poor customer analysis and lack of customer service.

James Norman, the KPMG head of insurance in East Africa, says many of the products do not meet customer demand, noting that means few people will buy them, a situation that translates into low levels of penetration in Rwanda and, in the region. Norman says East African insurers are facing a new challenge, where they have to increasingly serve customers better as per their individual needs.

"Insurance is a product you cannot see, touch or feel. What the consumer buys is peace of mind and protection, in the event there is a claim. So in many ways they are buying a service they do not want to use, but need to have,” Norman told Business Times over the weekend.

According to the expert, greater awareness about insurance and the dynamic nature of the sector are driving changes, challenging players to keep watching the trends to adjust accordingly to be able to meet customer needs.

"You must listen to the customer. It should not just be after the event, say a claim, but also during product development, and when they are buying insurance cover. This way, you will be assured of a loyal and satisfied client because you cater for all their requirements,” he advises.

Study pins sector players

A new study by KPMG indicates that 38 per cent of the insurance firms do not conduct customer analysis or date while designing insurance products. The study also shows that only 62.5 per cent of insurance firms rely on customer data when conducting day-to-day sales and relationship management.

On product development, the survey shows that 75 per cent firms rely on used data while designing new insurance policies.

Industry watchers say this partly explains the low level of insurance penetration, noting that insurers have not taken advantage of changing distribution channels to drive uptake.

"The way forward is to incorporate new technologies and traditional approaches to come up with innovative products to serve the mass market. Insurers must also design new ways of attracting new clients, especially from the agriculture and the small-and-medium enterprises (SMEs) market segments,” the experts said.

They encourage local insurers who use social media to monitor customer satisfaction proactively, but not to work like firefighters after a customer complaint has gone viral on social media platforms.

Those that use predictive underwriting to design exciting, and well balanced products will always have an edge over competitors, they add.

Gary Reader, the KPMG global head of Insurance, advised sector players to always manage claims quickly, fairly and transparently to ensure they are settled in time. He urged them to integrate technology in their operations to enhance service delivery, adding that insurers must also improve customer service and promote pro-people policies.

Reader, however, noted that the past decade has been fairly tumultuous for the sector, with changing customer demands and expectations, while some countries introduced new and more stringent regulatory requirements. He said increasing competition and disruptive technologies and business models have all created unprecedented change for the sector.

"We believe that if insurers are going to thrive in this new world, they will need to make fundamental changes to virtually every part of the business,” Reader noted.

He added that success in the insurance industry cannot come from simply tweaking the status quo.

John Bugunya, the chairman Rwanda Insurers Association, said the latest report gives insights, valuable tips and fresh survey data to help insurers in Rwanda achieve the value they expect from their business agendas. Bugunya, who is also the Prime Insurance chief executive, said insurers must anticipate market disruption, as well as use predictive analytics to address claims and underwriting challenges if they are to provide the best customer experience. 

He believes the local insurance has become of age, and is ready to take the industry to the next level of growth partly by diversifying their offerings to serve the mass market.

Esdras Nkundumukiza, the commercial director in charge of SMEs at SORAS, a local insurance company, said many people are still reluctant to take up policies though there are already tailored products for some sectors. Nkundumukiza noted that many SMEs operators think insurance is not important for small businesses.

"The main challenge is on renewals as most customers often reluctant to renew their premiums,” he said, adding that the current regulations are supportive of customers. Nkundumukiza said it is essential for insurers to improve customer care, noting that "this is the new battlefield”.

A new strategic plan in offing

Meanwhile Bugunya has said stakeholders are working on a five-year strategic plan that will help increase penetration levels and make the sector more competitive.

"We are currently finalising our strategic plan for the next five years that will help us address the challenge of product designing and pricing,” he noted adding that market players must ensure they adjust distribution channels to become more efficient and competitive.

The local insurance sector has nine non-life insurers, four life insurers, two public medical insurers, 15 insurance brokers, 365 insurance agents, and 12 loss adjusters. There is one public pension scheme managed by Rwanda Social Security Board (RSSB) and 57 private pension schemes.

Current performance

The local insurance sector total assets had increased by 12 per cent to Rwf306 billion as at December 2015, from Rwf272 billion at the end of December 2014. The sector’s total capital was also up by 12 per cent to Rwf222 billion, from Rwf198 billion in 2014.

The solvency margin, which is one of the key indicators to measure insurance financial soundness, was also above the minimum requirements of 100 per cent.

The sector continues to have sufficient liquidity as it is evidenced by the liquidity ratio of 355 per cent which is well above the minimum prudential benchmark of 150 per cent.