[Kenya] Insurance companies court technology to drive penetration

Kenya’s insurance companies have resorted to mobile phones to reach more uninsured Kenyans through the sale of insurance premiums, using enabled cash transfers to boost product penetration. Analysts said telecassurance, an initiative of the Association of Kenya Insurers (AKI), will increasingly become a driver in the growth of retail insurance penetration.

The model enable customers to pay for premiums in installments but at regular intervals. They could even convert their loyalty points if they are adequate to pay for the insurance premiums. Customers are allowed to pay for premiums using mobile phone money transfers. Kenya currently has 38 million mobile phone users according to the Communications Authority of Kenya (CA) latest report. An extensive network across the East African nation provides an excellent platform for insurance companies to reach a wider network of potential customers.

Adrian Sikule an expert in insurance says the shift towards mobile-phone enabled cash transfers will boost other existing products such as bancassurance services, where banks sell insurance products to customers taking various loans. He said insurance companies plan to diversify from relying exclusively on agents, to other technology-enabled platforms to reach more customers.

Insurance industry stakeholders who met in Nairobi recently resolved to not only focus on the traditional markets of middle- income groups, but also to tailor products that could appeal to the lower income cadres with premiums of between 15 U.S. dollars and 5 dollars per month. AKI hosted the country’s insurance industry players to a daylong seminar to discuss the use of mobile phone technology to drive the growth of insurance services as the insurance firms continue to court banks to accommodate more insurance products on their counters. It is hoped that telecassurance will boost insurance service growth especially in the rural areas.
Micro insurance has also played a vital role in penetrating insurance products and services to lower income earners who are disproportionately affected by natural calamities and accidents.

There is more hope for the insurance sector to continue engaging with the banks to promote the insurance service reach.
Through bancassurance, the insurance companies are seeking to tap into the 30 percent service reach that the banking sector has obtained to grow the insurance sector from its 3 percent rate of penetration.

Figures showed out of about 38 million Kenyans using mobile phone services, less than 10 percent of them consume insurance services.
Through telecassurance, customers have the freedom to pay for their premiums using the technology-enabled platforms like Safaricom’s MPesa, Airtel Money as well as Orange Money.

“Through this mode of payment, insurance firms would not have to wait for cheques nor would customers be required to spend like $30 to travel one part of the country to make a deposit in Nairobi of $20. This is a very revolutionary credit transfer agreement between the banks, the insurance firms and the mobile phone firms,” Adrian says, adding that sale of insurance products through the new method would boost service growth especially in the rural areas.

www.akinsure.com