Presented by Winnie njau, Group Head of bancassurance, KCB at the 1st Annual Bancassurance Conference | Villa Rosa Kempinski | Nairobi | Kenya. Lloyds Africa Markets

1. BANCASSURANCE
..……………THE JOURNEY………………
Winnie Njau-Mbugua
Group Head of Bancassurance - KCB

2. Scenario in Insurance Industry before
Introduction of Bancassurance
 Low penetration predominantly in middle and upper class
consumers.
 Low levels of consumer awareness.
 Low levels of trust coupled with negative perception
towards Insurance products and industry in general
 Irrelevant products perceived to be of little or no value
 Formal sector was main target market for most insurers
 Informal sector to a great extent ignored
 Insurance not accessible in remote and infrastructural
deficient rural areas

3. Bancassurance Journey in Kenya
2004: First Insurance Agency license issued to CBA Bank
under CBA Insurance Agency
2007: Equity Bank acquires License to operate under a
separate Equity Insurance Agency
2010: KCB acquires a License under KCB Insurance Agency
2011 to date: More than half of Kenyan Banks plunge into
Bancassurance
Nov 2011: First IRA Guidelines on Bancassurance issued
May 2013: CBK issues prudential guidelines allowing Banks to
distribute Insurance
Oct 2014: IRA drafts revised Bancassurance guidelines

4. 1
Agenda
3
4
2
Effectiveness of Models at Play in Kenya
Impact of Technology on Bancassurance
Drivers of Bancassurance Market
Conclusion
Increasing Penetration by Enhancing Bancassurance

5. Effectiveness of Models at Play in Kenya
Key Models used in Kenya
i)Partnerships between banks and insurance
companies where the insurance company uses
own staff to sell within Bank Branches
ii)Use of Bank’s own Insurance employees with an
Insurance desk set across the bank’s branches
iii)Distribution through a broking partner who
offers technical guidance and after sales service
under a profit-sharing model
Increasing Penetration by Enhancing Bancassurance

6. Effectiveness of Models at Play in
Kenya……
i)Partnerships between banks and insurance
Failed due to lack of ownership at the bank and
lack of clear partnership guidelines
Employees of Insurer perceived as outsiders and
lack buy-in and support from bank staff
Lacked regulatory support/ basis as Banking act
does not support use of outsiders in banking halls
Ambiguous cost-sharing/ profit-sharing criteria
Failure to create a win-win situation for Customer,
Bank and Underwriter: Trust, Loyalty & Growth

7. Effectiveness of Models at Play in Kenya….
ii)Use of Bank’s own Insurance employees
Model has been the most successful and ideal
for most banks
However, it’s an expensive model and not
sustainable in the absence of huge volumes
Is ineffective where insurance staff are expected
to support several branches
Scalable only where bank is expanding/ growing
Increasing Penetration by Enhancing Bancassurance

8. Effectiveness of Models at Play in Kenya…
iii)Distribution through a broking partner
The model has been fairly successful especially for
smaller banks where set-up of an independent
Insurance unit proved unsustainable
Also worked well for foreign banks who lacked
legislative support to set up Insurance agencies to
carry out Bancassurance
Challenges of enough brokers with capacity to
efficiently handle the volumes generated by banks
Increasing Penetration by Enhancing Bancassurance

9. DRIVERS OF BANCASSURANCE
MARKET
.

10. Drivers of Bancassurance Market
Desire by banks to offer a one stop shop for
financial services to their customers in order to
improve efficiency, enhance loyalty and rein
fence their customers.
Generally higher levels of trust in Banks vis-à-vis
Insurance industry players
Convenience, easy access and ease of premium
payment through Insurance premium finance
Strong distribution network and e-commerce
capability; Bank branches, Mobile platform, POS,
ATMs, Web, Bank Agents e.t.c
Increasing Penetration by Enhancing Bancassurance

11. Drivers of Bancassurance Market…
Banks see an opportunity to effectively grow their
non-funded incomes in the face of compressed
interest margins.
Due to huge insurance business volumes, banks
generally enjoy a higher degree of bargaining leverage
and relaxed underwriting restrictions backed by strong
underwriter partnerships. The stringent Service Level
Agreements enhance claim processing and settlement.
Ability to develop and sell simple, affordable and
relevant white-labled products riding on their
strong brands.
Increasing Penetration by Enhancing Bancassurance

12. Drivers of Bancassurance Market…
Breadth of Insurance product lines due to diverse
customer segments and the ability to develop new
relevant products and improve on existing
products.
Banks enjoy massive customer base with
customers straddling all economic sectors;
opportunity to offer a diverse range of products
 Ample financial resources to acquire reliable systems
and develop high quality human capital.
Increasing Penetration by Enhancing Bancassurance

13. Drivers of Bancassurance Market…
Expanding demand for insurance products to
meet broader range of customer needs with
Insurance Industry growth in the recent years
far outstripping growth in GDP.
Embedding of insurance products on existing
banking products e.g. Credit Life and
Mortgage protection on loans e.t.c
Increasing Penetration by Enhancing Bancassurance

14. IMPACT OF TECHNOLOGY ON
BANCASSURANCE
.

15. Impact of Technology on Bancassurance
• Integration – enhance interoperability between
Insurance and Bank systems leading to ease of customer
service across all service points of the Bank.
• Ability to develop standardized packages that can be
easily distributed by Bankers.
• Provide integrated view of customer information across
various products.
• Improve information-sharing practices and improve the
sales cycle.
• Enhances cost-efficiency and scalability.
• Enables integration to call centres enhancing the
capability of making outbound sales.
Increasing Penetration by Enhancing Bancassurance

16. Impact of Technology on Bancassurance
• Facilitates distribution of high volumes of lower
premium products within a short amount of time.
• Help improve insurance renewal and business
retention.
• E-commerce and mobile payment solutions act as
efficient claims delivery service points for customers.
• Offers capability for online real-time creation of policy
and downloading of scanned documents. Supported
by self-service menus on after sales service.
• Opportunity for online connection for claim and
complain filing to improve customer experience.

17. Impact of Technology on Bancassurance
• Penetration of lower income segments: Traditional
channels are well suited to meeting the needs of upper
middle class consumers, but are severely limited in
reaching the emerging classes. Technology offers an
opportunity to effectively and sustainably service this
category of insurance consumers.
• Opportunity for using established Bank’s mobile
payment solutions through a fully automated end to end
onboarding process to distribute simple Insurance
products.

18. Concluding Remarks
• There is urgent need to eliminate existing legal and
regulatory impediments as well as create consistency
and clarity in the regulatory environment to deal with
the existing misconception and competitor hostility
towards Bancassurance. This will create confidence for
further investments in this channel by Banks.
• Bancassurance is still a fairly underdeveloped channel
with very high potential and capability to enhance
insurance penetration across the country and bring
about the necessary fundamental economic
transformation and prosperity to the people of Kenya.
Increasing Penetration by Enhancing Bancassurance