British-American Insurance is the market leader in Kenyan insurance and has recognised that the country’s growing middle class and youthful population will provide a reliable market base for years to come
Kenya has a population of 40 million, covers some 550,000 square kilometres, and is astride the Equator in East Africa. It has the largest middle class in the region and is acknowledged as the entry point and business hub of the area. This middle class is a country and regional asset: demanding professional and private sector assignments throughout the region are often filled by Kenyans.
The middle class is the primary market for life insurance and over half of the population is under the age of 18. The country clearly has a demographic profile that will increase demand for years to come. Its vibrant private sector has proven itself a veritable growth engine for 50 years and Kenyan companies are leading investors in the neighbouring countries of Uganda, Tanzania, Rwanda and South Sudan. Kenya and the region enjoy GDP growth rates in excess of five percent, even as oil, gas and mineral discoveries suggest that this will increase as GDP increases in future.
Life insurance premium penetration in Kenya is only one percent of GDP
Life insurance premium penetration in Kenya is only one percent of GDP, reflecting significant scope for growth and development of the industry. Non-life insurance accounts for a further two percent of GDP. There are 45 insurance companies operating in this market, but only 23 of those have life insurance licences. There is therefore relatively more concentration in the life insurance market compared to 35 licences in non-life business (composite insurance in Kenya is allowed). Scope for market consolidation also exists.
This potential has attracted foreign investors to compete in the business with local entrepreneurs, resulting in a fascinating competitive environment showing engagement of international best practices with local understanding of the market.
British-American Insurance (Kenya) (Britam) is a subsidiary of British-American Investments (Kenya). Britam traces its origins to the Nassau Bahamas in 1920 as the British-American Insurance Company. A branch was established in Kenya in 1965 before becoming incorporated in 1979 with a local shareholding of 33 percent. In 1996, the company became a composite underwriter. The company effectively diversified into other financial services in 2004 when the parent company and an asset management company, British-American Asset Managers, were established. The parent company was successfully listed in 2011 as part of a strategy to broaden local ownership of this acclaimed brand. Britam is a diversified financial services group with primary interests in insurance, asset management, banking, property and private equity.
Dominant Kenyan insurer
The vision and strategic direction of Britam has been crafted through the rigour of regular board and management retreats and a strategic planning discipline that commenced in 1989. The retreats are facilitated by expert consultants. The board is composed of outstanding entrepreneurs, public service officers and executives. The Britam board is chaired by Peter Munga CBS, and includes Dr James Mwangi CBS, Benson Wairegi EBS, Tarun Ghulati, Agnes Odhiambo, Nduva Muli, Francis Muthaura CBS, and myself. The Group Chairman is J Nicholas Ashford-Hodges.
Britam is the dominant life insurance company in a competitive market of 23 underwriters. The life insurance market in Kenya is segmented into four, with Britam as the overall market leader.
For the last six years, Britam has been declared the Association of Kenya Insurers’ ‘Company of the Year – Individual Life Business’ for the performance of its life insurance agents. The award recognises the volume and quality of business sold measured in terms of annualised premium income, number of policies sold and persistency. In 2012, Britam was also recognised as the ‘Most Improved Company’. Furthermore, the leading agents in terms of volume of business written and persistency were both from Britam. This achievement is the outcome of disciplined recruitment and successful training programmes. Britam has become synonymous with a countrywide network of professional financial advisors. The financial advisory establishment in Britam today numbers 1,500 – twice the size of its nearest competitor.
Britam’s competence in channel management extends beyond financial advisory services to over 140 independent incorporated insurance brokers licensed to operate in the Kenyan market. While the market is crowded and fragmented, Britam has engaged over 100 partners in the most profitable segments of the market. Britam has also partnered with various banks, including Equity Bank, to establish a bancassurance channel that was the first to record business volumes of over KES500m in credit life insurance. Furthermore, Britam has bundled life insurance cover into micro-insurance solutions. This has helped transform the lives of 100,000 families in the tea sector through the exclusive channel of Majani Insurance Brokers.
Britam was the first and remains the only life insurance company in Kenya that issues life insurance policies within one day at any branch in Kenya. This has been achieved for non-medical examinable cases on the back of electronic document management capabilities and a wide area network. Financial advisors are trained in point of sale customer service skills. Welcome calls are made to all new customers reviewing the sales process, and quality assurance is provided. Financial advisors whose customers discontinue their policies within one year are subject to a commission clawback; those whose customers persist are rewarded after the second and third anniversaries of the policy. Customer communications are issued on the back of a strategy that utilises emails and SMS text messaging. Customer feedback is channelled through the financial advisors into the product development cycle.
Britam’s extraordinary performance is based on a framework of risk management and governance practices. The company was the first in the country to have a fully fledged actuarial department. This department is able to carry out all actuarial work including experience reviews and valuations. The independent actuary is Aon Hewitt of Johannesburg, South Africa. There is a risk and compliance department as well as an internal audit department. Board committees include IT, audit, risk and compliance and investment and strategy. Britam has initiated a major IT investment targeting a quantum leap in customer service and efficiency on a par with any insurance company in the world. Britam’s operating model is under review and a shared service centre will be established for the group as it expands into Uganda, South Sudan, Rwanda and other countries in the region.
For more information www.britam.co.ke