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Daily, not monthly, insurance premiums a better deal for Kenya’s matatu operators

Photo by Jociku via Wikimedia Commons.

In December, operators of matatus (minibuses in Kenya) went to court to petition a 15% increase in their monthly premiums by insurance firms, Invesco Assurance and Direct Line Assurance. The increase meant premiums for a 14-seater matatu expanded from Ksh7,817 to Ksh9,005, which operators said was too much.

But a new company, LGT Insurance Agency, is looking to ease some of this financial burden by offering daily premiums for matatus, a first in Kenya. The broker – a subsidiary of Lions of Good Times (LGT), a Kenyan investment company – covers the monthly fee for matatus with insurance underwriters, and then sells this cover on to operators via daily instalments.

“The daily premium product for matatus is picking up quite well. We now have around 2,000 [operators] in our client base and we only [launched the product] about three weeks ago,” LGT chief executive Biwott Tirop told How we made it in Africa.

He added that daily premiums better address the needs of matatu operators, who live day-to-day and struggle to save.

“That is why you see people rushing to come [on board]. In the matatu industry they operate on a daily basis. In the morning, they do not have a coin. In the evening, whatever they have collected they share according to the [agreement] they made… with the driver and the co-driver. Whatever remains they [give] to the owner of the car,” said Tirop, adding that matatu operators generally take home around Ksh3,500 ($33.85) per day.

“So if you provide a daily premium that insures and also [covers] the service of the car… it would be a big advantage for them… So now when they are sharing the costs at the end of each day, [they] can also allocate something for the premium, because you find that at the end of the month they don’t have [enough].”

LGT offers daily premiums of Ksh305 ($2.95) to cover a 14-seater matatu, Ksh420 ($4.07) for a 25-seater, and Ksh480 ($4.65) for a 28-seater. According to Tirop, these smaller amounts (paid via the mobile money platforms M-Pesa and Airtel Money) are far more achievable on a daily basis than paying a lump sum at the end of the month.

“That is why we also [use] the mobile money platform, so that they can pay whenever they are. They do not need to come to the office… It’s very simple. [They] just pay the moment they have the amount.”

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  • Consider Ncube

    microinsurance. this is a good initiative. the penetration ratio will surely increase. poor people need insurance more yet they can not afford it.

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