NAIROBI, Kenya, Jun 30 – The government has been urged to amend the Banking Act to allow banks to directly sell insurance products through bank assurance.
CFC Life Insurance Managing Director Abel Munda said that such a move would increase the country’s overall insurance penetration.
Currently, banks act as agents of insurance companies because the Act which governs their operations limits banking to deposit taking and lending activities.
“I am happy that the Minister for Finance did recently include in the Finance bill provisions to allow for bank assurance and we hope that parliament will pass it,” Mr Munda stated.
“That Act is very important because bank assurance is the way to go so that you are able to provide the whole spectrum of financial solutions to particular individuals,” he added.
Speaking at the same time, CFC Life Head of Sales and Marketing Ezekiel Owuor further stressed the need to increase channels through which Life Insurance products can be distributed.
“Currently, the bank assurance market in this country is unreserved but elsewhere, the bank model has been highly successful. In Spain for example, up to 70 percent of new life and pensions business is sold through banks. There is no reason why we can’t do the same in Kenya,” he expressed.
At the same time, CFC Life Head of Pensions James Oyugi underscored the need for the government to put in place mechanisms which would make it compulsory for employers to set up pension schemes for their employees.
This was after a survey by CBA revealed that out of the approximate 30, 000 employers, only 1,300 had set up pension schemes for their employees.
Mr Oyugi stated that such a move would ensure economic stability prevails in the country.
“If you had all the 30,000 setting up this arrangement, what sort of industry would we have?” he posed, going on to explain that it would reduce dependency on foreign aid.
“It is trillions and with that we may not need to bother the World Bank and IMF for funding, because money will be right in the country,” he said.
They were speaking during a press conference where Mr Munda said the insurance penetration throughout the country should be increased.
“The overall penetration is still lower than three percent, which is one of the lowest on the world. For life only it is less than one percent. I think this is because there is lack of awareness and by and large it is influenced by traditions,” he said.
“Going into the future, we need to look onto our own individual financial security.”
He also outlined plans by the CFC Life Group to market its products at the grassroots level.
He drew attention to the fact that the rural population has often been under-served by the insurance industry and emphasised the necessity of coming up with initiatives which will assist in the penetration of insurance products in these areas.
“By building awareness of our products and understanding customer needs, CFC Life is improving knowledge of our products among the Kenyan public,” the CFC Life MD said.
He pointed out the positive impact that the Information Systems have had on the company.
“This year alone, CFC Life has been able to pay out claims of over 40 million up to now and this does not include pensions,” he said.