NAIROBI, September 16 – The insurance industry is blaming the lack of adequate investment options in the Capital Markets Authority on the low rate of innovation regarding new products in the industry.
Pan Africa Insurance Chief Executive Tom Gitogo said this has led to limited options for consumers of insurance products in the country.
Gitogo explained the annuity business highly depends on a player in the industry being able to guarantee an income for life.
“So you need fairly good quality assets to ensure that as an insurance company you can constantly meet monthly payments to these annuitants for life,” he explained.
He said this has resulted to insurance companies heavily relying on bonds.
“At the moment we are very heavily dependent on bonds as underlying assets for annuities but you will agree with me that you cannot control the interest rates on bond and you cannot trade them as effectively as you want,” he said.
Speaking to Capital Business, the Association of Kenya Insurers chairperson Tom Gichuhi admitted that the body had not directly raised the issue with CMA but most investors in local and foreign markets have invariably raised the concern.
Gichuhi however noted that Capital Markets Authority in their Medium Term Plans 2008-2012 have clearly indicated that they intend to come up with a wide variety of products and services.
Meanwhile, Pan Africa Insurance has unveiled a new product is targeting retirees, which Gitogo explained, would offer a guaranteed monthly payments for a customer after a single premium payment of not less than Sh500, 000.
“The government has in the last few years made some positive legislative changes that will undoubtedly spur growth in the pension industry. Our launch of ‘Flexi Annuity’ is an acknowledgement of this fact,” he observed.
The product is targeted at persons above 50 years old and about to retire.
Pan Africa Insurance holdings recently announced the 2008 half year results in, which the profit after tax increased to Sh236 million compared to Sh26 million over the same period last year.
Pan Africa Insurance holding’s subsidiary company, Pan Africa Life Assurances is the leading insurance company commanding 21.43 percent of the total premium of Sh9 billion.
Meanwhile the company has announced plans to expand into the East African region.
“We already have a subsidiary in Tanzania but we are also looking at Uganda and Sudan, but I can’t give any time lines as you know these things take a while due to the legal procedures involved,” Gitogo said.