State of the Bancassurance Market in Kenya 2024

The Association of Kenya Insurers this week released findings from a study on the state of the bancassurance market in Kenya. The study showed gross written premium grew from Ksh19.5 billion in 2019 to Ksh35 billion in 2023, representing a 79.4% growth. During the same period, the Bancassurance distribution channel market share grew from 8.4% to 10%.

While bancassurance experienced strong growth in premiums, the claims equally surged from Ksh6.5 billion to Ksh14 billion during the five-year period. The loss ratios in non- life insurance moved from 43.9% to 52% between 2019 and 2023, compared to an industry average of 67%.

Out of the 24 licensed bancassurance agencies, nine contributed 83.5% of the gross written premium collected, each generating over Ksh1 billion, with the leading agency generating Ksh6.34 billion.

Motor insurance leads as the most popular non-life insurance product, commanding 58.6% of the total premium collected, while credit life/mortgage insurance leads the life insurance products at 62.9% of the total premium collected.

Bancassurance refers to the agreement between a bank and an insurance company through which the bank sells the insurance product of the partner insurance company to its customers. The most popular bancassurance model adopted globally and Kenya, is the pure distribution model – where the bank simply acts as a distribution agency of the insurance products to its customers.

“As a distribution channel, bancassurance has helped spur innovation among insurers as they collaborate to develop products that address customers changing needs,” AKI Executive Director, Mr Tom Gichuhi, said. “The findings of this study have not only helped us to know where we are but have also provided a roadmap for addressing challenges and seizing opportunities moving forward.”

AKI partnered with the Bancassurance Association of Kenya and Research 8020 to carry out the study. Mr Aggrey Mulumbi, chairman of the Bancassurance Association of Kenya, said there is need for further investments into bancassurance to grow the market share and spur the insurance industry.

The study revealed the high regulatory compliance rate of over 90% by bancassurance agencies. “This speaks to the significance of corporate governance in the bancassurance market as this contributes to transparency in operations which further helps with building customer confidence and trust,” Mr Mulumbi said.

The Insurance Regulatory Authority, represented by the Director of Market Conduct,  Ms Ann Chelagat, is happy with the performance of the bancassurance agencies and extend an invitation to the Bancassurance Association to engage more on improving on the current regulatory landscape to create an enabling environment.

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