• Benjamin O. Abongo Kenya Methodist University


Purpose of the Study: The purpose of this study was to examine the link between digital technology within the insurance industry and insurance penetration.

Problem Statement: There are factors lowering the speed of adoption which includes: disruption to existing insurance business models, data management, data ownership, regulation, data security and fraud, resistance to change, and cyber security. The linkage between the penetration of these digital channels in the insurance industry and the penetration of insurance at the macro level in different countries show the existence of a global increase in number of patents applied in the years between 2011 and 2016, but despite accelerated adoption, developing countries are seen to record low insurance penetration and digital adoption index (DAI). The emerging and developed countries show both high DAI rating and insurance penetration. Studies also reveal that developed countries like Japan and Israel record very high DAI but moderately low insurance penetration while South Africa has very high insurance penetration but slightly above average DAI. Therefore, the emerging and developed countries show very minimal linkages between digital adoption and insurance penetration.

 Study Methodology: The study used literature review methodology. A robust technological wind is blowing the insurance industry away from the conventional insurance model. The wind is stirring nearly every aspect of the insurance business from the analog to a predominantly digital model. Various technological innovations like the mobile connectivity, machine learning, Artificial Intelligence (AI), Internet of Things (IoT) and the Social Media – have crushed traditional barriers to entry and expansion, and accelerated the speed of change within the insurance market. Insurance business must therefore evolve to capture new possibilities and challenges from competitors. The role of technology in insurance penetration has been enjoying growing interest.

Results: The study found insurance penetration in developing countries to be significantly lower than that of the developed countries, but insurance growth in developing countries exceeds that observed in the developed countries. Modern business focus is shifting towards improving e-commerce capabilities, deepening customer relationships, and operating a leaner and smarter supply chain.

Conclusion: The study concluded that, digital technology is improving the business operating environment. The main areas of interest include the adoption of digital marketing, digital distribution, digital IT architecture and digital attackers with digital technologies such as telematics, automation, and machine learning. Drivers of the technology adoption were found to include advancement in technology, emerging innovative practices such as peer-to-peer insurance models, block chain technology (BT) and the emergence of a technologically gifted generation of millennials.

Key words: Innovation; digital technology; insurance penetration; technology adoption

Author Biography

Benjamin O. Abongo, Kenya Methodist University

Postgraduate, Kenya Methodist University


Ambrosi, E. and Rosina, A. (2009). L’Italia non è unpaese per giovani. Marsilio, Venice. [Google Scholar]

Arena, M. (2006). Does Insurance Market Activity Promote Economic Growth? A Cross-Country Study for Industrialized and Developing Countries. World Bank Policy Research Working Paper, 4098.

Azman-saini W.N.W & Smith P., (2010). Finance and growth: new evidence on the role of insurance. MPRA Paper, No. 65836, posted 30. July 2015 05:24 UTC; Munich Personal RePEc Archive

Bright, J. (2016). Africa’s tech hubs. TechCrunch. [Google Scholar]

Browne M.J. & Kim K., (1993). An International Analysis of Life Insurance Demand. The Journal of Risk and Insurance, 60(4), 616 – 634, American Risk and Insurance Association.

Catlin T. and Lorenz J.T. (2017). Digital disruption in insurance: Cutting through the noise. McKinsey
Chester A., Hoffmann N., Johansson S., & Olesen P.B., (2018). Commercial lines insurtech: A pathway to digital. McKinsey & Company

Chironga, M., Grandis, H. De, & Zouaoui, Y. (2017). Mobile financial services in Africa: Winning the battle for the customer. McKinsey & Company Financial Services.

Combi, C. (2015). Generation Z: Their Voices, Their Lives. Windmill Books, London.

Crawford S. & Handy G., (2013). Insurance in a digital world: the time is now.EY Global Insurance Digital Survey 2013

Crawford S., Rusignan L., & Kumar N., (2018). Global insurance landscape and key indicators: Pursuit of growth amid cautious optimism. Working Paper, Ernst & Young Global Limited.

Curak, M., Loncar, S., & Poposki, K. (2009). Insurance Sector Development and Economic Growth in Transition Countries. International Research Journal of Finance and Economics, (34), 30-41.

David-West, O., & Evans, P. C. (2016). The rise of African platforms: A regional survey. [Google Scholar]

Deloitte. (2016). Industry 4.0 Is Africa ready for digital transformation? [Google Scholar

Dhanaraj, C., & Khanna, T. (2011). Transforming mental models on emerging markets. Academy of Management Learning & Education, 10(4), 684–701.

Drouillard, M. (2016). Addressing voids: How digital start-ups in Kenya create market infrastructure. In B. Ndemo & T. Weiss (Eds.), Digital Kenya: An entrepreneurial revolution in the making (pp. 97–131). London: Palgrave Macmillan UK. [Google Scholar]

Ekekwe, N. (2017). How digital technology is changing farming in Africa. Harvard Business Review. [Google Scholar]

GSMA. (2017). The mobile economy of sub-Saharan Africa 2017. London: GSMA. [Google Scholar]

Han, L., Li, D., Moshirian, F. &Tian, Y. (2010). Insurance Development and Economic Growth.The Geneva Papers on Risk and Insurance-Issues and Practice, 35, (2), 183-199.

Iansiti, M., & Lakhani, K. R. (2017). The truth about block chain. Harvard Business Review, (January–February), 1–17. [Google Scholar]

Islam, M.A. (2012). An empirical analysis of causality between development of non-bank financial intermediaries and the economic growth in Malysia. European Journal of Social Sciences, 30,(4), 654-664.

Khan Z.A., (2008). Importance of Insurance in Our Economy. Articles, Features and Review, 18(2)

Khanna, T., &Palepu, K. (1997). Why focused strategies may be wrong for emerging markets. Harvard Business Review, 75(4), 41–51. [Google Scholar]

Kipley, D. & Lewis, A. (2009). The Scalability of H. Igor Ansoff’s Strategic Management Principles for Small and Medium Sized Firms. Journal of Management Research, 1 (1:6); ISSN 1941-899X

Koulopoulos, T. and Keldsen, D. (2016).The Gen Z Effect: The Six Forces Shaping the Future of Business.Routledge, London.

Lee C., Chang T. & Chang C., (2013). Does insurance activity promote economic growth? Further evidence based on bootstrap panel Granger causality test.The European Journal of Finance, 6(5), 1-24

Liquid Telecom. (2017). African. IoT 2017. [Google Scholar]

Michael, T. (2011).Deconstructing Digital Natives: Young People, Technology, and the New Literacies .Routledge, London.

Ndemo, B. (2017). Finally, the lands office is digitized. Daily Nation. [Google Scholar]

Ndemo, B., & Weiss, T (Eds.). (2017). Digital Kenya: An entrepreneurial revolution in the making. London: Palgrave Macmillan.

Nsehe, M. (2014). PayPal extends payment services to Nigeria, 9 other countries. [Google Scholar]

NTTIII (2014). The Insurance Industry as a Digital Business. Working Paper, NTT Innovation Institute, INC.

OECD (2018). Global Insurance Market Trends, 7th Edition 2017. OECD Working Paper, OECD Insurance and Private Pensions Committee

Olopade, D. (2014). The bright continent: Breaking rules and making change in modern Africa. New York: Houghton Mifflin Harcourt Publishing. [Google Scholar]
Omwansa, T., & Sullivan, N. (2012). Money, Real Quick: The story of M-Pesa. London: Guardian Books. [Google Scholar]

Pandit, V. (2015).We are Generation Z: How Identity, Attitudes, and Perspectives are Shaping our Future. Brown Books Publishing Group, Dallas, TX.

Parker, G. G., Van Alstyne, M. W., & Choudary, S. P. (2016). Platform revolution: How networked markets are transforming the economy – and how to make them work for you. New York, NY: W. W. Norton & Company. [Google Scholar]

Prensky, M. (2001). Digital natives, digital immigrants. On the Horizon, 9(5), 1-6.

Schumpeter, J. (1934). The theory of economic development. Cambridge. Pp. 61-116 MA, Harvard University Press.

Shaputis, K. (2004). The Crowded Nest Syndrome: Surviving the Return of Adult Children.Clutter Fairy Publishing, Olympia. [Google Scholar]

Sibindi A, &Ntwanano J.G., (2014). Insurance Sector Development and Economic Growth: Evidence from South Africa. Corporate Ownership & Control, 11, (4)

Skipper, H. D. (2001). Insurance in the general agreement on trade in services. America Enterprise Institute.

UNCTAD (1964). Proceedings of the United Nations Conference on Trade and Development. Vol. I, Final Act and Report, p. 55, annex A.IV.23.

Urry, J. and Sheller, M. (2006). The new mobilities paradigm. Environment and Planning, 38 (2), 207-26.

Urry, J. and Sheller, M. (2012). Mobile Technologies of the City. Routledge, London.
Vaughan.E.&Vaughan.T (2008). Fundamentals of risk and insurance,111. Riverstreet, Hoboken, John wiley and sons.

Ward, D. & Zurbruegg, R. (2000). Does insurance promote economic growth? Evidence from OECD countries. Journal of Risk and Insurance, 67(4): 489 - 506.

Zeng W. Liu Y. & Deng Y., (2009). A Comparative Study of International Insurance Markets. The Geneva Papers on Risk and Insurance - Issues and Practice, 34, (1), 85–99

ZOU, H. & ADAMS, M. (2006). The Corporate Purchase of Property Insurance: Chinese Evidence. Journal of Financial Intermediation, 15, 156-196.
How to Cite