Insurance companies have stepped up their drive to reach more uninsured Kenyans through the sale of insurance premiums using mobile phone service-enabled cash transfers.

The shift towards mobile cash transfers would boost other existing products such as bancassurance, where banks sell insurance products to customers taking various loans.

An initiative of the Association of Kenya Insurers (AKI), the insurance companies plan to diversify from relying exclusively on agents to other technology-enabled platforms to reach more customers. AKI Chairman Mark Obuya said through telecassurance, customers would pay for premiums using mobile phones.

“It is quite a revolutionary service. This will enable customers to pay for premiums in installments but at regular intervals,” he said. “They could even convert their loyalty points if they are adequate to pay for the insurance premiums.”

Insurance industry stakeholders meeting in Nairobi recently resolved to not only focus on the traditional markets of middle-income groups, but also to tailor products that could appeal to the lower income cadres with premiums of between US$15 and US$5 per month.

“We need consumers to start considering buying insurance products as an investment, not as a protection service,” said Bruce Sahd, the chief executive and co-founder of Case Johnson Group, a South African marketing firm currently assisting Kenyan insurers to improve the reach of insurance.

AKI hosted the country’s insurance industry players to a seminar to discuss the use of mobile phone technology to drive the growth of insurance services as the insurance firms continue to court banks to accommodate more insurance products on their counters. It is hoped telecassurance, would boost insurance service growth especially in the rural areas.

“Bank customers appreciate the inclusion of insurance services,” said Dr Edward Odundo, the Chief Executive Officer of Retirement Benefits Authority (RBA). “The distribution of credit will increase the penetration of insurance cover.”

As a result of efforts to promote the uptake of insurance products over the bank counters, the banks made profits worth Ksh390 million while the insurance sector was able to generate premiums worth Ksh2.6 billion generated from the bancassurance businesses in 2011.

There is more hope for the insurance sector to continue engaging with the banks to promote the insurance service reach. Insurance industry players say the recent decision announced in the 2012/2013 budget, to review the restrictive clause allowing the banks to operate independent firms offering other financial services have opened the floodgates for the insurance industry to integrate the financial services freely with banking.

Ms Winnie Mbugua, the Director of Equity Insurance Agency Limited, said embracing bancassurance has boosted the bank. She said the services have improved in sales volumes and branch network.

“The bancassurance will increase product penetration and risk mitigation. There is the payment of the insurance premiums upfront,” Mbugua told participants at an AKI-sponsored industry conference. The conference discussed bancassurance scene in Africa and the potential for the sector to benefit rapidly from its growth while improving the reach of the insurance services across Kenya.

Dr Odundo said he welcomed the need to integrate the financial services because of the potential it had to change the lives of Kenyans in the rural areas. Through bancassurance, the insurance companies are seeking to tap into the 30 percent service reach that the banking sector has obtained to grow the insurance sector from its 3 percent rate of penetration, said Tony Van Niekerk, the Managing Director of Cover Publications.

Figures show out of the 29.2 million Kenyans using mobile phone services, only 10 percent of them consume insurance services.

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