The Equity Group has ventured into the insurance market with the launch of the Equity Life Assurance (Kenya) Limited, setting the stage for a fierce battle in the underwriting sector.
Equity has been offering insurance services through Equity Bancassurance Intermediary Limited which was incorporated in December 2006 and was licensed in May 2007 by the Insurance Regulatory Authority (IRA) to offer both life and non-life business.
Through bancassurance, banks allow insurance companies to sell their products to the bank’s client base, with the bank acting as brokers.
This will also pull the plug for companies that were benefiting from insurance premiums paid by the lender to insure loans offered to their customers.
“We felt, given our background in the banking sector, we could complement what the insurance industry has been doing. We have come to appreciate that our purpose is not complete without thinking (about) insurance. We have lived a purpose of changing lives, giving dignity and expanding opportunities for wealth creation and we have done that through intermediation,” said Equity Group CEO Dr James Mwangi.
The insurance industry in Kenya is characterized by low penetration levels, currently estimated at 2.4 percent. This has been attributed to a number of factors including poor or limited product portfolio, low or no awareness on available insurance products, low-income levels among the key consuming public, perceived low rate of returns for life insurance policies, cumbersome claim settlement procedures, lack of trust of insurance players, negative perception of providers/intermediaries and expensive premiums among others.
“We realised how important insurance would be to complement what the financial sector has bred. Protection is the biggest tool for protecting the quality of the assets of the banking industry. It is on that basis that we thought we would wish to come and make our contribution by making protection more inclusive and simplifying protection,” added Mwangi.
“The insurance business relies heavily on trust and Equity has a well-defined history and support from the public which is a key aspect for success in the sector. We congratulate Equity Group for joining the insurance sector as the newest player. Additionally, Kenya is ranked number 3 or 4 with regards to insurance penetration in Africa and many investors have taken an interest in the sector. We are happy to see a local player coming in to contribute to our growth,” said IRA chairman Abdirahin Haithar Abdi.
“Ten years from now we should come back and talk about the history of Equity Life Assurance. Within one or two years you (Equity Life Assurance) could be one of the biggest companies in the insurance industry.”
According to Dr Mwangi, 87 percent of Kenyans have access to financial services, hence the need to have a similar section of the population have access to insurance services “through the banking sector”.
“The sector has grown very much in the last few years and we expect growth of more than 15 percent this year. We are also looking at closing the protection gap and bringing more people to insurance protection,” said IRA head of communications Noella Mutanda.
Equity Life Assurance will be headed by Angela Okinda as the Managing Director and Principal Officer while Dr Edward Odundo will chair the board.
“ELAK will contribute to the trusted Equity brand by providing inclusive, affordable, innovative and accessible insurance products to a majority of Kenyans who are not utilising insurance solutions to secure much needed protection of their lives, health and wealth, or secure their financial futures through savings solutions. Our commitment is to provide consumers with freedom and ease of access to insurance solutions, payment and placement of their insurance coverage, as well as support and advice during the life of the policy. ELAK will also ensure easy access to insurance solutions through multiple distribution channels. ELAK’s provision of insurance will be refreshingly different, innovative and very convenient,” said Okinda.