DTB Group CEO Nasim Devji and Jubilee Insurance Kenya CEO Patrick Tumbo shake hands after the signing ceremony to launch the referral model in Bancassurance/CFM BUSINESS
The model which is the first in Kenya will see DTB provide specially trained financial advisors who will see that insurance savings plan adequately meet customers’ financial profile and needs.
DTB Chief Executive Nasim Devji says that individual life insurance plans, which provide an effective means to save for the individual customer, have not been a focus for banks.
“The referral model will greatly enhance the capability to reach more customers. Banks offering individual insurance plans through their insurance agencies have had low to medium success with high customer dropout rates. The referral model has therefore emerged as the more sustainable and viable choice, as has been the witnessed in many countries across Asia, Europe and Latin America,” Devji said adding that trained and dedicated insurance staff have been deployed in all their branches.
She said that banks are now becoming a one stop financial shop with customers trusting and buying insurance policies from a bank branch rather than from agents selling door-to-door.
In Africa Bancassurance has also been on the rise.
In a report by Finaccord titled Bancassurance in Kenya 2014, it is estimated that the most popular product in the region is credit life insurance, which has been tied in with mortgages and personal loans; this is closely followed by household insurance and motor insurance, both of which are combined with specific lending facilities.
“Having one of the fastest growing middle-class populations in the world, Kenya has led the way in the East African region when it comes to the steady development of Bancassurance. However, the general lack of awareness of life insurance has given the need to promote it effectively through the retail channel of banks and this cannot be over-stated,” said Jubilee Insurance Kenya Chief Executive Officer Patrick Tumbo.
In its December 2013 analysis, TechNavio estimated that the global Bancassurance market will grow at a Compound Annual Growth Rate of 5.98 percent between 2014 and 2018.
Much of this growth will come from the adoption of more enhanced, diversified product portfolios offered by banks, particularly in the face of further banking industry regulation that is certain to limit the profitability of lenders’ more traditional business lines.
Moreover, it would appear certain that Asia and Africa will be the principal drivers of this growth, while Europe remains strong but stagnant.
