Bancassurance is an agreed partnership between a bank and an insurance company that allows the insurer to sell its products to the bank’s customers.
In Kenya, banks act as intermediaries, providing a distribution channel for insurance companies to reach a broader market.
Bancassurance ensures that the parties involved both get profits. The bank gains an additional revenue stream while the insurer gets access to a large customer base.
The Insurance Regulatory Authority of Kenya (IRA) established frameworks to regulate intermediaries and ensure that all intermediaries hold licenses to operate legally.
“The Insurance Regulatory Authority of Kenya (IRA) has created frameworks to regulate bancassurance intermediaries and has seen to it that all intermediaries obtain licenses to operate legally. The licensing of these intermediaries ensures that customers receive professional service, high-quality products, and sufficient consumer protection,” Business Radar reported.
In 2004, the Central Bank of Kenya granted the first commercial bank the authority to operate a bancassurance business.
Approximately 30 banks and microfinance institutions established services through specialized agencies and subsidiaries.
Regulatory Framework in Kenya
The IRA regulates business in Kenya to ensure professionalism, compliance, and accountability among intermediaries and issues licenses.
Moreover, the IRA monitors the operations of intermediaries to protect the interests of customers.
Through regulations, the IRA ensures that intermediaries adhere to the ethical code of conduct.
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Benefits of Bancassurance
Customers can access insurance services directly through their bank, without visiting an insurance company.
By leveraging the networks of banks, insurance companies can reach more people who will benefit from the insurance.
Bancassurance offers banks an additional source of revenue through earning commissions from the insurance policies they sell.
Products Offered by Licensed Intermediaries
Licensed intermediaries in Kenya offer various insurance products, including Life insurance, health insurance, general insurance, and investment-linked insurance.
Licensed Intermediaries in Kenya
Among the licensed intermediaries in Kenya are Absa, Co-Op Consultancy, Credit Bank, Diamond Trust, Eco Insurance, Equity, Family Bank, Faulu, HF, I&M, KCB, Kingdom, KWFT, NBK, NCBA, Paramount, Prime Bank, Rafiki Microfinance, Sidian, Smep, Stanbic, Standard Chartered, and U & I Bank.
Verifying Licensed Intermediaries
The public interested in getting insurance services from the intermediaries can verify legitimacy by visiting the IRA’s official website to view the current list of licensed intermediaries.
Alternatively, one can verify the status of an intermediary by contacting the IRA’s head office directly or by sending an email to [email protected]
Also Read: IRA Bars Three Insurance Companies from Issuing Further Contracts, Holders to Seek Alternatives
Challenges Facing Bancassurance in Kenya
Most of the bank customers in Kenya are still unaware of the insurance products available to them through their banks.
Failure of intermediaries in Kenya to comply with IRA regulations can lead to penalties or the loss of licenses.
In addition, offering bancassurance requires banks to train their staff and develop specialized expertise.
The ease of buying insurance at the bank may discourage consumers from shopping around and securing a competitive price.
