The value of insurance business underwritten through partnership between banks and insurance firms grew by 13.3 percent to Sh35 billion in the year ended December 2023, deepening its share in the industry as more players joined.
Latest data from the Association of Kenya Insurers (AKI) show the gross written premium (GWP) from the bancassurance business grew from Sh30.88 billion posted a year earlier, taking its share in the insurance industry’s business to 10 percent.
At Sh35 billion, the bancassurance business has grown by 79.5 percent over the past five years, given that it was at Sh19.5 billion in 2019—then contributing 8.43 percent of the industry’s GWP.
AKI bancassurance market assessment report co-authored with Research 8020 Limited found that the 79.4 percent growth in premiums was faster than the 56.2 percent growth in GWP that the industry posted over the five-year period.
This offers the promise that bancassurance could boost the country’s quest to move insurance penetration from the current under three percent.
“In the next five to 10 years, we see bancassurance becoming the biggest distribution channel in this market. It is now commanding 10 percent of the industry GWP yet it is still a very young concept in Kenya,” said Tom Gichuhi, chief executive at AKI.
The growth in bancassurance is particularly notable in the non-life insurance sector, which saw a 72.2 percent increase through bancassurance, compared to a more modest 43.4 percent growth in the broader industry, according to Silas Mudachi, research manager at Research 8020.
“Within customer-centric models, we have seen tailored products with flexible payment plans, leveraging data analytics for personalisation. We are growing in terms of leveraging on data and it is an area that has more potential,” said Mr Mudachi.
Of the Sh35 billion premiums, non-life business like motor insurance has contributed Sh18.52 billion while life business brought in Sh16.48 billion.
According to the study, 21 out of 24 bancassurance intermediaries reported increases in premiums between 2019 and 2023, with nine intermediaries more than doubling their premiums during this period.
By the end of last year, intermediaries generating over Sh1 billion in premiums commanded 83.5 percent market share.
The report showed motor, fire, medical, and theft insurance were the key contributors to the growth of non-life insurance, with motor commanding 58.6 percent of premiums last year on the back of increasing demand for comprehensive vehicle coverage.
The growth of the life insurance from bancassurance business has been largely fueled by credit life, mortgage and individual life products.
“A straightjacket model of regulation will not work for bancassurance in this market. Such an approach will stifle a very good initiative,” said Aggrey Mulumbi, chairperson at Bancassurance Association of Kenya, on the need to improve the current bancassurance regulations.
