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Insurers get creative

NAIROBI, Kenya, Mar 17 – For a long time, insurance firms have been urged to come up with products that appeal to the market. Calls for innovation to tap into the bulk of the market have flown from all corners. 

This is no wonder the reason why insurance components such as life still have a low take up raising arguments that the policies are characterised by high premiums thus not reachable by the bulk of the market.

In a sector which has several players offering life insurance, its take up is still low despite being one of the most essential products that people generally need to be armed with.

According to Ezekiel Owour, the Head of Sales and Marketing at CFC Life Assurance Limited, statistics by the Association of Kenya Insurers (AKI) indicate that life insurance take up is less that 5 percent in Kenya. Such figures are worrying considering that insurance is key in anyone’s life as it indemnifies risk from unfortunate eventualities.
Old Mutual Group chief executive Bertie van Der Walt notes that the contribution of the life insurance sector to Kenya’s Gross Domestic Product (GDP) in 2007 was only 0.83 per cent which compares drably with such countries as South Africa at 15.7 per cent. New policies issued in 2007 grew to 77,375 representing an increase of 11.8 per cent compared to 2006.

These are some of the reasons that insurers are fast realising need to be addressed through solutions aimed at bridging this gap by introducing products that appeal to the market while at the same time finding new opportunities to grow their businesses.

Recently, CFC Life Assurance Limited introduced a revolutionary product known as LifeVest, a product that allows the Kenyan market to invest as well as save while enjoying a compulsory life cover with additional optional rider benefits.

“LifeVest is targeted at the middle to upper income population and the lower to middle income populations respectively.

The minimum age at entry for a policy holder is 18 years while the maximum age at entry is 70 years,” explains Owour. Consumers can choose from low, medium and higher risk options such as insurance policies, unit trusts and real estate respectively.

For Sh2,500 per month, an individual can qualify for a compulsory fixed life cover of at least Sh100,000 and savings benefit with no strict underwriting nor medical examinations. LifeVest is offered with a minimum cover period of five years and a maximum of 30 years.

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On the other hand, Old Mutual Life Assurance recently launched Rafiki Halisi Life Plan, which is aimed at ensuring that millions of Kenyans who previously could not afford life insurance can do so at a minimum premium of Sh250 per month.

Old Mutual has two options for this product: individual and family. The individual option covers those aged between 10 to 65 years and is suited for those who would like to insure themselves only. The family option –which is offered at a discounted price -gives Kenyans a chance to insure up to four children. Just as LifeVest, there is no medical testing before signing up for the product.

Owour says the company has seen the need to provide cutting edge insurance solution that meets the ever changing customer demand for protection and investment.  More Kenyans are inclined to investment and this is also the reason why most of them are going for insurance policies with investment components as they are not only looking at being paid after an accident or demise.

At the same time, Owour notes that insurance companies are doing away with some products which have so far undergone their life cycle and matured and in turn do not offer any revenues to the underwriters. “Globalisation and information technology have also called for innovation,” he adds.

He is certain that the shift from policies that have been inclined to ‘real life’ to the ‘life-invest’ will increase the uptake of these policies considering the price and affordability as most of these products are dynamic offering attractive interest rates and investment options.

Owour cautions consumers that while taking up such products, it is not an insurance policy that determines the rate of return urging them to always ensure that they get value on the money invested. However, he notes that the presence of a sound regulator, the Insurance Regulatory Authority, consumers should not panic but remain rest assured that they would get value for their money.

 Owour says that the market remains largely untapped despite the presence of many similar players. For insurance companies to realise more growth there is a need to venture into the mass market where the bulk of Kenyan market lies on is yet to be insured.

“Insurance companies only need the necessary infrastructure for the mass market to be reached,” Owour says.

On the other hand with the low take up of life insurance policies there is a need for public education on this important insurance component especially on its possibility of indemnifying the risks associated with unfortunate events. “The Government could even make the take up of life insurance mandatory,” he adds.

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