The dramatic transformation in how sub-Saharan Africans live and work is creating huge potential for the expanding insurance market. Jadiah Mwarania, Managing Director of Kenya Reinsurance Corporation Limited (Kenya Re), explains the substantial size of the markets opening up and how his company is well positioned to capture them.
Could you please discuss how economic expansion and demographic transformation in sub-Saharan Africa will open up new opportunities for the insurance sector?
Africa is transforming at a very rapid rate. From upscale shopping malls to new Western-style housing developments, the dramatic transformation is changing how sub-Saharan Africans live, work and plan for the future. This on its own showcases the optimism for the insurance industry in the region.
Significant population growth, rapidly rising incomes and the relatively low penetration of insurance products suggest to us great potential for both life and non-life products in sub-Saharan Africa. As a greater percentage of the population moves to urban areas and gains affluence, insurance purchases to cover health care and items such as cars are more likely. The sub-Saharan economies are among the world’s fastest growing, and foreign investors are recognizing the opportunities these markets present.
In addition, we are expecting the number of Africans joining the working-age population (aged 15 to 64) to exceed that of the rest of the world combined by 2035, which will provide new opportunities for insurance penetration.
How does Kenya’s insurance sector compare to its neighbors in the EAC?
It is pivotal to understand Kenya is and will remain the principal gateway to the EAC, and it is the hub for commercial activities across region, with Nairobi being the megacity housing much of the services and management talent deployed in neighboring Uganda and Tanzania, etc. We have a strong, developed ICT sector, as well as financial and retail services. Capital inflows are very strong, and the government has launched significant bonds recently in order to finance infrastructure projects. Kenya also possesses strong trade links with its neighbors and with the European Union, which accounts for 24% of Kenya’s exports.
When it comes to insurance, Kenya generated insurance premiums in 2014 meeting $1.8 billion, which is the largest in sub-Saharan Africa outside of South Africa. We expect, according to analysts, the insurance market to grow to $2.2 billion by 2018.
How does Kenya Re fit in to the country’s insurance landscape?
The insurance sector during 2014-15 has witnessed significant growth with companies investing heavily, introducing unconventional products and services in order to attract and meet the demands of the vigorously dynamic markets. The emergence of Takaful business, micro insurance and agricultural insurance, political risk and terrorism has necessitated the provision of reinsurance services to the industry.
The reinsurance business environment is extremely dynamic, unpredictable and characterized by cutthroat competition. Only entities fortified by appropriate strategies will survive or thrive. Kenya Re has focused on capturing new markets and as a growing business we are implementing a five-year corporate strategy that will not only create a reinsurance company that delivers top performance but also a sustainable value.
Our main pillars of the strategy are:
What sets Kenya Re apart from its competition?
The company has evolved during recent years to have a strong capacity and the ability to take on key risks, which contribute to our advantages. We have grown to an extent and recognized around not only the region but the world to be trusted internationally and have a certain reinsurance protection which helps us to increase capacity.
Another key factor differentiating us is our technical ability to advise and provide services at high quality. We realized that technology plays a major role in enhancing operations and effective service delivery to stakeholders. Therefore we have implemented integrated Enterprise Resource Planning (ERP). The key objective of this implementation was to give Kenya Re a robust platform that would enhance service delivery as well as augment risk management. The corporation aspires to maintain leadership in the application of technology to drive its business.
We continuously push our boundaries by partnering with key organizations in order to develop new products. Just recently we were the first to link with a local insurance company to develop mobile phone insurance, which was one of the first in Kenya. The company was also one of the first to introduce micro-insurance policies, which has now caught up with the market and has become a strong seller. Long before that we partnered with a life insurance company to be the first generating policies in the market which accepted HIV/AIDS as an insured peril into the policy.
In addition, the company officially launched its Enterprise Resource Planning (ERP) on March, 2015. The ERP will help the corporation streamline and smooth its operations to make customer engagement seamless. This is due to the fact that more organizations are leveraging on technology not only to make their business processes efficient, but also to integrate all aspects of the business.
Please elaborate more on the significance for Kenya Re the Niko Fiti program empowering the country’s disabled communities?
The Niko Fiti ‘Ability Beyond Disability’ Campaign was introduced in 2011 as part of our CSR program, which seeks to empower persons with disability to undertake their daily operations with minimal dependency, and to provide them with access to education and employment. The company since then has been active by providing the necessary provisions of mobility assistive devices such as wheelchairs, special seats, tricycles, canes, crutches, polio boots, prosthesis, etc.
We believe that the campaign is a great success and internally we are very proud that it has managed to change and affect so many lives – over 2,000 persons with disability in different counties across Kenya. The campaign itself in the last three years has been traveling throughout Kenya with five caravans, having a dedicated team that issues various devices.
However, we have extended the campaign to provide financial support to disabled communities in Kenya, in order to help them to start a business, and boost their business, which we believe is one of the very important steps to help with rehabilitation.