On Monday, January 10, 2022, Equity Group launched the Equity Life Assurance (Kenya) Limited, its new venture into the insurance industry.
Traditionally, Equity Group is known for banking services spreading across seven Eastern African countries including Kenya, Uganda, Tanzania, South Sudan, Rwanda, the Democratic Republic of the Congo and a representative office in Ethiopia.
Since 2006, Equity has been offering insurance services through Equity Bancassurance Intermediary Limited, which sold the services as a broker for other insurance companies.
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The lender enters an industry that is currently experiencing turmoil, with several insurers recording increasing losses over fraudulent claims, especially in the vehicle sector. As a result, the insurers were planning to increase vehicle insurance premiums by about 50 percent, before the High Court stopped the move in a case filed by the Kenya Human Rights Commission (KHRC).
However, Equity comes on board with a strong financial muscle that is threatening other players, backed with at least 463 bank branches as of 2021 and close to 10,000 employees.
As of August 2021, it had assets exceeding Ksh1.119 Trillion (US$10.1 billion). The group also had over 14 million customers in six African Great Lakes countries, with Ksh790.6 billion (US$7.61 billion) in deposits.
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According to data by Insurance Regulatory Authority (IRA), private vehicle insurers reported a combined Ksh2.88 billion loss in the period to June 2021 while commercial vehicle insurers reported a Ksh1.4 billion loss.
Despite the losses, the industry rakes in billions every year, with the report by IRA indicating that the industry raked in Ksh58.7 billion in gross premiums for long-term insurers in quarter two of 2021.
Generally, industry gross written premium stood at Ksh144.02 billion as at end of Q2 2021 representing an increase of 19 percent from Ksh121.04 billion in Q2 2020.
“The premium reported by the long-term insurers in Q2 2021 amounted to Ksh58.66 billion, a growth of 22.6 percent compared to a growth of 8.2 percent the previous year,” the report read in part.
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The long-term insurers’ asset base grew by 13.5 percent to Ksh533.43 billion and is largely composed of income-generating investments of Ksh493.78 billion. Of the total assets, 10.2 percent (Ksh54.57 billion) was funded through shareholders’ equity.
General insurance business remained the largest contributor to industry insurance premium contributing 59.3 percent of the total premium. Motor insurance and medical insurance classes of business account for 62.3 percent of the gross premium income under the general insurance business.
Even as Equity Group looks to have a slice of the fortunes, there will be effects both to other players and clients and the industry as a whole.
Considering its presence, it will be easy for Equity to penetrate the market.
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However, Equity will have to battle it out with market leaders like Britam Life Assurance, which is the biggest insurer in terms of gross premium income with a 21.3 percent market share, followed by ICEA Lion (16.2 percent), Jubilee Insurance (11.5 percent) and Kenindia Assurance (8.1 percent). Other big underwriters include Sanlam Life Assurance (6.9 percent) and CIC Life Assurance (5.6 percent) while the remaining 17 companies share the remaining 30.3 percent.
If Equity Life Assurance (Kenya) Limited lives to its expectation, it could become one of the big six insurance companies in Kenya, or even topple market leaders and take the top spot.
“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,” said IRA chairman Abdirahin Haithar Abdi.
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.
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Equity will bank on its branch network to penetrate the market, owing to the large number of Kenyans with access to financial services.
According to Equity Group CEO Dr James 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.
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