Insurance companies seek new strategies to attract customers

Insurance companies are speeding up the search for new distribution channels to cover a bigger market.

Conventional agents who are the face of the industry and limited direct sales by in-house contacts have failed to make meaningful impact on individual policy sales.

Revenue growth has been relatively slower yet evidence especially based on sale of micro insurance business shows more Kenyans are ready for the services.

Although industry has consistently recorded growth in the last seven years, the gross premium volumes that topped Sh51.9 billion in 2008 are seen as too low for an industry with 43 players.

Growing new distribution channels for individual life products will be one of the key business growth plans for Pan Africa Insurance this year, said the company’s CEO, Tom Gitogo.

“(We shall) focus on our relationship with banks to provide insurance solutions to their customers,” he said.

Life cover volumes remained at Sh1.5 billion in the year ended December 31, 2009 while corporate business grew by 50 per cent to Sh1.5 billion.

Pan Africa Insurance sees bancassurance — where banks distribute its products — as a major growth area but the law does not allow banks to do the business.

To tap into bancassurance market, Pan Africa is now insuring unsecured loans and mortgages issued by banks.  

“This is the easiest form of bancassurance. The legislative environment makes it difficult for proper bancassurance where bank customers can buy other covers such as life insurance.  This needs to change soon and hopefully something will come through in the next Finance Bill,” said Mr Gitogo.

Product innovation

Sammy Makove, the CEO of Insurance Regulatory Authority, said plans to review the Insurance Act or introduce new regulations on distribution options are at advanced stage.

“Next week, two consultants from South Africa will start a survey in the country to find out the challenge of regulation for the micro-insurance industry and especially how to allow for more distribution channels,” he said.

The search for new distribution channels has triggered product innovation.

UAP has come up with a product for agricultural inputs for small holder farmers.