NAIROBI, Kenya, Jan 24 – Regional insurer APA Insurance is seeking to widen penetration in Kenya this year by enhancing its distribution channels to grow its market share.
Chief Executive Officer of Apollo Group (APA’s parent company), Ashok Shah said distribution still remains a major challenge emphasising the need for regulators to allow for bancassurance to help improve channels.
“I’d like to call upon the regulators to allow for bancassurance. The regulatory framework has allowed for agency banking and micro finance institutions to accept deposits and give out money. Unfortunately, the same does not apply to the insurance industry,” he said.
Bancassurance enables insurance companies to increase market share without having to build a wide agency network and incur the extra cost involved by making use of the banks’ existing networks.
Financial institutions such as Equity Bank and I&M Bank have already embarked on this venture selling health, life, and personal accident insurance to customers through their branches.
Poor distribution channels have been a major reason for the low levels seen in insurance penetration in Kenya that stands at just three percent.
Kenya’s penetration registers significantly lower, compared to other countries on the continent such as South Africa, which has a penetration of 9.94 percent.
When put up against the penetration levels of emerging markets like Malaysia which has an estimated 41 percent of the population covered by some form of life insurance Kenya fairs even worse with less than one percent of the population insured.
As the second largest insurer in the country, APA is on an aggressive drive to double its market share from the current 8.7 percent to 15.6 percent by 2016.
Newly appointed APA Insurance CEO Simon Clayton said developing more micro-insurance products will be a top priority for the company’s management team to help deepen insurance penetration in the country.
“In terms of penetration in micro-insurance, we’ve already made great strides in the agricultural sector also in terms of protecting credit. For us we will be putting a stronger focus on micro-insurance, specifically targeting that we grow it significantly every quarter,” he said.
Following the devolution process, APA has an ambitious plan of opening a branch in each county.
As far as regional expansion, the insurer is planning to open three branches in Uganda within the year.
In Tanzania, APA is working with Reliance Insurance in which it holds 34 percent shareholding, which Clayton said the company plans to grow into a controlling stake as part of its long term strategy.
The use of mobile telephony is one area the insurer is looking to venture into in the near future, by constructing systems around mobile telephone payments.