Jubilee Insurance has sent a proposal to the regulator asking for the industry to set up an innovation fund to help test and develop new insurance products as clients age and a low uptake by younger customers.
The firm reckons that with many insurers in losses and others recording depressed profits, members can pool money annually and cut huge budgets required by individual firms for researching, testing and rolling out products.
Chief executive Julius Kipngetich said Thursday that the current insurance business model has been shunned by customers and that only innovation hubs can give the industry a lifeline.
“No insurance company is profitable enough to allocate enough money for innovation. Our suggestion is to contribute small amount of money per policy and create a pool for innovation,” said Mr Kipngetich.
“Our competition is not on the platforms; it is the value propositions we give customers. We can therefore collaborate even on back end solutions such as cloud portal.”
A common innovation fund will also cushion individual insurers from the risk of injecting huge budgets into testing products that may not eventually work.
Insurance Regulatory Authority manager for policy research and development Robert Kuloba said the regulator welcomes inclusive innovation labs that will rope in fresh ideas.
“We are working on developing a regulatory sandbox to enable insurers and any startup to test ideas and see which one can be fine-tuned and delivered to the market. We hope to commit resources by end of year,” he said.
Insurance penetration has dipped to 2.43 percent, the lowest in 15 years while profit has plummeted to Sh3.54 billion- the lowest in 12 years, a performance Mr Kipngetich says confirms that the current model is not working.