Safaricom wants to partner with insurance companies to insure millions of phones against breakage and theft, opening up a new revenue stream for the telco months after registering an underwriting agency.
The telco, which announced last month that it had set up a subsidiary to pilot device insurance after receiving regulatory approval, now wants to scale up the idea by teaming up with general insurers.
Through Safaricom Insurance Agency Limited (Sial), the telco wants to partner with insurance companies in a revenue-sharing model that will see insurers use Safaricom’s system to sell gadget insurance. The insurance will cover risks such as accidental screen damage, any other physical damage or loss of the device.
“Safaricom is seeking proposals from qualified insurance service providers to deliver a comprehensive device insurance solution that will potentially cover over one million devices and will ensure seamless coverage for customers,” says the telco in a December 13 tender document.
“The selected provider must collaborate with Sial to structure, distribute, and administer policies. Proposals must detail how the solution will leverage Sial’s existing expertise and infrastructure.”
Safaricom is emboldened by the performance in the six months ended September 2024, which showed that Sial collected premiums worth Sh22 million under a pilot phase as it issued 117,000 policies on affordable phones that it sells under the Lipa Mdogo Mdogo arrangement.
The policies issued have a sum assured of Sh975 million— the amount of money the telco stands to pay out to the insured customers should the risks such as theft or screen damage materialise. There were 65.45 million mobile phones in Kenya as at the end of December last year.
Safaricom is targeting devices ranging from Sh5,000 to Sh300,000 based on the purchase price or current value of the insured device.
Other risks to be insured include liquid damage, fire damage, natural disasters like flooding, mechanical or electrical breakdown and damages or loss during international travel.
The insurance will be structured in three tiers, with Sial receiving a commission on the gross premiums and the rest going to the insurers.
The first level, called screen-only, will only cover accidental screen damage, while tier II will be called screen and damage, allowing customers to be insured against screen damage and additional physical damage to their devices.
The third tier, called screen, damage, loss, and theft, will offer comprehensive coverage including total loss of the device.
The telco wants insurers that will be able to approve claims within 24 hours of receiving all the relevant documents from the claimant and ensure repair within seven working days with authorised repair centres that it plans to partner with.
Device replacement will be from Safaricom shops and authorised partners. Safaricom wants insurers with fraud detection systems and processes to ensure genuine claims processing and also offer a paperless claims submission channel that will allow the customer or Safaricom shop attendants to file the claims.
The telco has a rich customer base of more than 33.5 million active users who transact more than Sh1.74 trillion monthly through its mobile money platform M-Pesa, giving it room to deepen insurance reach in the Kenyan market from the current under three percent.
