Tuesday, August 16, 2022

Equity Bank given license to start own life insurance business

Equity Bank Life Insurance: Top regional lender Equity Group has received a license to operate a life insurance business in Kenya.

The license is the latest among diversification products that are being issued by the bank.

The Insurance Regulatory Authority (IRA) issued the licence to Equity Life Assurance (Kenya) Limited (ELAK), which is subsidiary of the Equity Bank Group.

The license will mark Equity’s first direct venture into the insurance business. Previously, the bank has been acting as an agent of the more established and renowned BRITAM through a bancassurance agreement.

“Our inspiration is to offer insurance to all categories of consumers and make insurance accessible, affordable and inclusive in line with our purpose of transforming lives, giving dignity and expanding opportunities for wealth creation,” said Equity Group chief executive officer Dr. James Mwangi.

The insurance industry in Kenya is characterized by low penetration levels, currently estimated at 2.4 per cent. This has been attributed to a number of factors including poor or limited product portfolio, low or no awareness on available insurance products, low-income levels among the key consuming public, perceived low rate of returns for life insurance policies, cumbersome claim settlement procedures, lack of trust of insurance players, negative perception of providers/intermediaries and expensive premiums among others.

Kenya’s Sh. 235 billion annual insurance market is also dominated by general insurance with mandatory motor and medical policies.

World Bank’s IFC buys Sh. 12.2 billion stake in Equity Bank

Motor and medical insurance, however, have huge claims and high loss ratios which may have informed Equity’s strategy to target long term products.

Equity has chosen life insurance which comprises Sh. 102 billion in annual premiums or 43.4 per cent per cent of the overall insurance business.

“Our market, however, is still general business driven and I call upon Equity Life Assurance to identify strategies of increasing insurance growth in the long-term business,” said IRA chief executive Godfrey Kiptum.

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