Prudential Life which returned to Kenya close to 30 years after its exit has invested Sh1 billion on buying out Shield Assurance, life arm of troubled Blue Shield Insurance.
In 2014 Swiss Re bought a 26.9 per cent stake in Apollo Investments, the holding company of APA Insurance, which was previously held by private equity firm LeapFrog Investments.
Kenya’s life insurance industry is the most developed amongst lower middle-income economies in sub-Saharan Africa and Asia, a report by the Overseas Development Institute (ODI) and Prudential Life shows.
The report covering the life insurance sector and economic development says long-term underwriting assets in Kenya account for 8.8 per cent of GDP which is more than two times the average rate for lower middle countries surveyed.
“Kenya shows a higher level of life insurance market development than expected based on its GDP. In 2010, assets had reached 8.8 per cent of GDP compared to 3.5 per cent for an average lower-middle-income country.
Annual premiums had reached 1.06 per cent of GDP compared to 0.26 per cent for an average lower-middle-income country. Both assets and premiums had also seen sustained growth throughout the last decade,” said the report.
Ghana, Nigeria, Tanzania, Uganda, Ethiopia, the Philippines, Vietnam and Indonesia were also surveyed.
Increased use of technology, strong regulation and alternative channels are the main growth drivers of life insurance.
“It (Kenya) has reasonably strong financial regulation and high levels of financial access driven by the widespread adoption of mobile banking and agency distribution,” said the report. Data from the Insurance Regulatory Authority (IRA) shows that life insurance premiums worth Sh39.5 billion were sold in 2014.
Bullish
Local and foreign insurance companies have been bullish on the industry’s potential.
Prudential Life which returned to Kenya close to 30 years after its exit has invested Sh1 billion on buying out Shield Assurance, life arm of troubled Blue Shield Insurance.
“Prudential Kenya has already invested over a billion shillings in the country’s economy and has pledged to create thousands of high-quality jobs by 2020. We are excited that our business will play such a significant role in Kenya’s development,” said Prudential Africa chief executive Matt Lilley in a statement.
In 2014 Swiss Re bought a 26.9 per cent stake in Apollo Investments, the holding company of APA Insurance, which was previously held by private equity firm LeapFrog Investments.
The IRA annual report however says that more life covers can be taken up if insurance companies became more enterprising.
“Very little effort is directed at research and development by insurers leading to very limited innovations. Existing insurance products do not reflect, for sure, the needs of Kenyans, particularly the low income group and the young generation,” said the IRA 2014 annual report.
“Although micro insurance portend a huge opportunity for attracting the low-income group to buy insurance, the industry should look further than merely reducing the price of insurance.”
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