During the bloggers meeting with executives from British America last week, I had a chance to have a chat with the Stephen Wandera, the Managing Director of British American Insurance, on the industry.
Our informal chat turned to the low rate of insurance penetration in east Africa. Kenya for instance has an insurance penetration of less than three percent. Insurance penetration in Uganda remains the lowest in the East African region at only 0.6% when compared to Kenya’s 2.6%, and Tanzania and Rwanda’s 1% respectively. This is compared to South Africa’s 14% or Malaysia’s 10%.
This is despite the number of insurance companies being more than 45, almost like the number of banks. Access to banking services meanwhile is more than 50% of the bankable population. This low penetration of insurance has been blamed on the negative perception of insurance, its cost and distribution.
Mr Wandera however, views this state of affairs as an opportunity for growth. And during the chit chat, he revealed that British America Insurance is looking at how to expand its distribution through models like bancassurance, where insurance products are offered in banking halls.
It is also exploring how to use technology to cut the cost of acquiring customers, paying premiums and other expenses that make insurance products expensive. Technology like M-Pesa, for instance saves clients the time and expense of walking to a bank or insurance company to pay premiums.
Making telesales is also a cheaper way of attracting customers. With Facebook and Google introducing Video Chat technology, financial advisors can even sell you a product via Facebook and just show up to sign the papers. Insurance needs an Equity Bank, a player that will demystify products and make them a must have for the masses. With its reputation and solid financial background, British American can do that.
Mr Wandera revealed that they are exploring ways which more Kenyans can get covered. And as the parent company of British American Insurance heads for the stock market, the new investors who will buy in the IPO can also be turned into customers.
Mean while, town hall meetings that are being held throughout the country to popularize the IPO have been a success, with many number of residents coming out to express their willingness to buy the IPO.
This week, they were held in Nyeri, Nakuru, Kisumu and Eldoret. On Monday, one will be held in Mombasa. During the meetings, prospective investors get a chance to ask British American Executives about the company, the IPO and other industry issues. The IPO opens on on 12th July 2011 and closes on 5th August 2011. Make a date!