Britam pulls plug on individual sales for popular health cover

Britam is pulling the plug on an increasingly popular low-end cover for individuals launched with Safaricom in January last year.

The underwriter will no longer offer its Linda Jamii health insurance cover to individual customers though it will continue to sell the same to employees of firms and members of investment or social groups.

The listed insurance company said it had decided to change to a business model that goes after groups such as chamaas (investment clubs), small and mid-size enterprises (SMEs) as opposed to individuals to raise efficiency.

READ: Safaricom’s Linda Jamii cover to now target SMEs

The firm said targeting customers who belong to the same work or social group would reduce the administrative burden associated with selling the micro-health cover and at the same time increase uptake of the products by selling to a wider pool.

“This will enable us scale our business very quickly and that way we can increase the penetration of our products,” said Britam general manager (micro-insurance) Charles Muyodi.

Individuals who bought the Linda Jamii covers will still continue to get the services until expiry but no new policies will be sold effective this month.

Analysts said the shift to groups from individuals is becoming a common industry practice also meant for insurance companies to manage their risks.

Insurance companies last year incurred huge costs from health insurance triggering enhanced vigilance and risk management.

Francis Mwangi, head of research at Standard Investment Bank, said by going after SMEs and larger companies, insurers are able to sell products based on the risk profile of the group.

“If there is a claim it affects the entire group that way it is easier to price premiums,” he said.

Mr Mwangi added that companies are better customers because they have more incentives to reduce their premiums and, therefore, take measures to reduce unnecessary claims.

Linda Jamii is a micro-health cover that was launched in January 2014 together with the telco and Changamka Microinsurance targeting the underserved low end of the market.

Insurance penetration stood at three per cent at the time and one reason cited for the low figure was a lack of infrastructure to make payments on premiums.

The micro-health cover had an entry price of Sh12,000 per year offering holders for in and out patient, maternity, dental, optical, a hospitalisation and income replacement benefit services worth Sh250,000.

Britam and Safaricom’s partnership was meant collect payments through the M-Pesa mobile money transfer service.

Britam, however, declined to disclose the number of individuals who have taken up the health cover to protect its data from its competitors.

The listed company revised its books for 2014 in late April reducing after tax profit by Sh342 million to about Sh2.5 billion.

Profits were boosted by the purchase of Real Insurance in mid-2014.

Real Insurance contributed Sh2.2 billion in premiums and fund management fees, helping grow the group’s gross revenue 55 per cent to Sh14.7 billion from Sh9.46 billion recorded the previous year.

Britam’s assets grew from Sh46.9 billion to Sh72.9 billion last year with equities and fixed income accounting for 58 per cent of this portfolio.