Kenya has earned a reputation for being at the forefront of digital innovation in Africa. Kenyan companies have been lauded for being digitally led, with a strong focus on leveraging technology to drive growth and improve efficiency – positioning them as market leaders in Africa.
However, even with these developments, the insurance industry lags. Uptake of insurance products remains low in comparison to other countries.
According to the Q4’2021 Insurance Regulatory Authority (IRA) and Kenya National Bureau of statistics (KNBS) 2022 Economic survey, insurance uptake in Kenya at 2.3 % as at FY 2021. which is low compared to the global average of 7.4%. One of the main reasons behind this attribute is the lack of trust in insurance companies.
The insurance industry plays a critical role in the economy of Kenya, providing coverage for individuals and businesses against various risks. However, with the increasing use of technology in the industry, there is a growing concern over data protection.
The Data Protection Act, 2019 and the Data Protection (Registration of Data Controllers and Data Processors) Regulations, 2021 have come into effect to address this issue, and it is imperative that all stakeholders in the industry comply with these regulations.
Data protection is crucial in the insurance industry because it deals with highly sensitive personal information. The information includes medical records, financial information, and other personal details that can be used for identity theft, fraud, and other malicious activities.
The loss or misuse of this data can cause significant harm to individuals and organisations, resulting in financial loss, damage to reputation, and legal action.
A survey by Accenture found that 82% of insurance executives believe that data breaches pose a significant threat to their business. Insurance companies collect and store vast amounts of personal data that are attractive targets for cybercriminals. Therefore, it is imperative that they comply with the Data Protection Act and take measures to protect their customers.
Health insurance providers handle both their clients’ actuarial and sensitive health data. Insurance companies in this area of focus must therefore recognise the importance of protecting this data and ensuring its confidentiality, integrity, and availability. One such company is AAR Insurance, which has evolved to become a leader in the health insurance space in Kenya.
To demonstrate its commitment to protecting clients’ privacy and data, the insurance provider has taken steps to become certified by the Office of the Data Protection Commissioner in Kenya. This certification verifies that AAR Insurance has implemented appropriate technical and organisational measures to protect personal data and has established policies and procedures for managing data protection risks.
The importance of data protection in the insurance industry cannot be overstated. It is not just about protecting personal information but also about instilling trust and confidence in the industry. Insurance companies collect personal data from customers during the underwriting process, which is used to assess risk and determine premium rates; the data is also used for claims management, fraud detection, and compliance purposes.
Therefore, insurance companies must ensure that this data is collected and processed transparently and lawfully and only for specified and legitimate purposes. If this is adhered to, the insurance industry will build the trust and confidence of its clients.
The Author is the Head of Risk and Compliance at AAR Insurance Kenya.