NAIROBI, April 26 (Reuters) - East Africa’s largest insurance group Jubilee Holdings plans to develop innovative means to reach the uninsured to boost profits by 20 percent in 2018.
In Kenya, East Africa’s richest economy, insurance penetration — the ratio of the value of insurance premiums to GDP — is less than 3 percent, Chief Executive Julius Kipng’etich said in an interview with Reuters.
Kenya’s insurance market is expected to grow to $2.2 billion by 2018 from $1.8 billion in 2014, when it generated the highest premiums outside South Africa, according to a report by Ernst & Young.
Unlocking market potential requires targeting uninsured people, particularly the growing middle class, in creative ways, Kipng’etich said, citing how Safaricom’s mobile money had transformed the notion of “unbanked” in Kenya.
M-Pesa, Safaricom’s financial services platform, is used by nearly 28 million subscribers in a country of 45 million people, and has been replicated in other markets.
“M-Pesa disrupted the banking sector and the players had to start doing things differently,” Kipng’etich said. “Insurance has to think like that.”
Kipng’etich said Jubilee Insurance is using technology and data analytics to determine consumer behaviour and develop new strategies.
For example, the company uses an artificial intelligence-powered “chat assistant” to help customers with insurance queries via Facebook Messenger.
Jubilee Holdings grew its pre-tax profit by 13 percent in 2017 to 5.16 billion Kenyan shillings, but growth was slowed by a prolonged election season.
“But that now is behind us and we hope to accelerate the growth this year,” Kipng’etich said.
“Our plan is to grow both vertically and horizontally in the region ... The 20 percent growth cuts across this and by doing so, we will ultimately be growing our bottom line,” he added.
He cited calmer politics, along with an anticipated uptick in government spending on infrastructure and other projects, as reasons why growth would be stronger this year.
Increased foreign direct investment, tourism inflows and diaspora remittances would also drive growth, he said.
Jubilee Insurance offers a broad range of insurance products, including life, medical, home, motor and travel policies, as well as personal pension plans.
Kenya has dozens of licensed insurance companies, but few compete with Jubilee Insurance, suggesting consolidation is needed, analysts say. Some large international insurers including Allianz and Swiss Re have entered the market in recent years.
Jubilee Insurance also has to compete with emerging insurance models piloted by tech start-ups and catering to groups like farmers and other low-income populations.
Kipng’etich took over as CEO of the insurance conglomerate in January after resigning from the loss-making Kenyan supermarket chain Uchumi.
Jubilee Holdings is the parent company of five insurance businesses that operate in Kenya, Uganda, Tanzania, Burundi and Mauritius. It claims total assets of over $1 billion and has more than 500,000 clients across its five markets. ($1 = 99.9500 Kenyan shillings) (Reporting by Omar Mohammed Editing by Maggie Fick and Adrian Croft)