Insurance uptake in any sector is always influenced by the insuring public’s awareness about insurance. Other factors are secondary to the fact.
A recent high profile insurance round table session discussed insurance penetration based on secondary factors like introduction of affordable products in the market, introduction of bancassurance into the market, agricultural insurance and micro-insurance. Other factors discussed included unhealthy competition in the market which leads to predatory pricing. Public awareness on insurance was touched on based on the need to create a risk management culture among the public and more so to educate the public on the benefits of insurance uptake. This round table however did not expound on how this can be achieved.
Insurance penetration and its growth in the initial stages was mainly through insurance intermediaries comprising of agents and brokers and this drove insurance growth steadily upwards until the two started being sidelined in favour of banks and other channels. While other ways to improve insurance uptake in the country are welcome, they should not be promoted in favour of the former but that is what is currently happening in this country. There seems to be a silent war especially on the agents by vilifying them as unprofessional and unworthy of being in the insurance industry forgetting that they were at the forefront of the fight and to the idea of taking insurance to the public.
But where did the rain start beating us?
Insurance is a multi-billion shilling industry and some quarters felt that these monies should be gotten by hook or by crook. The first step was to get the banks’ acceptance into the insurance sector through making some back-room deals. Initially the banks were content to offer insurance premium financing without going into the selling of insurance products. They found out they could have the whole cake, and that’s where insurance intermediaries started seeing laws crafted to get rid of them and allegations flying around as to how unprofessional insurance intermediaries were.
While it could be true there may be unprofessional ones amongst us, what with a group comprising thousands of agents with no oversight as to their activities, there was a better way to manage these agents instead of wholesale condemnation of the group. There are thousands still who are professional and others who may be quacks. However, the powers that be are not interested in safeguarding the insurance intermediaries’ careers and thus their incomes, but interested in creating opportunities for banks to reap where they have not sowed. Banks’ initial mandate was to improve insurance penetration through looking at the uninsured in the economy and therefore tapping into this precious resource. But they started poaching into the intermediaries’ clients thus going against the very rules which they were given a license to operate under. Our pleas to the regulator have largely gone unheeded as banks continue operating with impunity.
Professionalising insurance agents is easy and can be done through proper regulation. This has to start by recognising their professional association that is tasked to ensure that there are no bad apples among them. Other professions do the same and this maintains professionalism in their respective sectors.
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The issue of permitting unprofessionalism amongst us has provided fertile ground for the regulator to demonise and castigate us as a group that needs to go home and let the banks do the business as they are seen as more professional in their approach. This is bad for the insurance sector and growth. As is seen in any group touching on matters insurance no one wants to acknowledge or accept that the insurance agents of this country have been neglected and should be taken care of before any other aspect of insurance penetration is looked into. It is unfair and unjust that even reports from the regulator want to emphasize on how insurance agents perpetrate fraud so that their point of how unprofessional we are can sink into anyone who’s interested. This is done at the expense of insurance growth in this country.
The basics to insurance penetration boils down to recognising industry associations and having them anchored into the Insurance Act. This will make them have teeth in their pronouncements and improve professionalism in the sector.
The second is disallowing banks from the insurance sector and have them go back to their core mandate of providing finance to customers wanting insurance premiums as they did before. Banks are not interested in the insurance business except for the premiums they get to finance their other activities of lending. It is an open secret that banks do not remit insurance premiums unless forced to do so.
Growth of insurance has to start with those two acts; all others are an exercise in futility.
Washington Ndegea Chairman Bima Intermediaries Association of Kenya (BIAK)
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