Banks likely to edge insurance agents out of their own turf

Resolution Insurance CEO Peter Nduati during a past event. PHOTO | DIANA NGILA |   NATION MEDIA GROUP

In Summary

• Some of the top distributors are Equity, Barclays, Chase and Standard Chartered banks.

By MWANIKI WAHOME
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Banks are set to take the top positions in the distribution of insurance products, edging out traditional agents who have sustained the industry over the years and contributing over 70 per cent of premiums.

The matter is causing concern among insurance agents who have organised themselves to ward off
competition and re-orient themselves to new market realities. The sector is increasingly adopting new channels to deliver products using mobile and Internet platforms.

“We expect that when the top distributors of insurance products are announced this year, the top five positions will go to banks. Like in South Africa, banks will be the largest intermediaries in insurance industry,” said Resolution Insurance MD Peter Nduati.

Some of the top distributors are Equity, Barclays, Chase and Standard Chartered banks.

But agents are fighting to stay relevant in the fast-changing environment and want banks barred from requiring that customers take up insurance cover through selected agencies before obtaining loans.

Bima Intermediaries Association of Kenya, an agents lobby launched last week, said they were lobbying the government to have the Insurance Act amended. They want the rules tightened to prevent banks from misusing their dominant position to disadvantage agents.

Banks were allowed to sell insurance products — a practice known as bancassurance — in 2010 through a change of law, but agents complain of being edged out of the market by the banks’ preferred agents.

“Some banks are forcing customers to take insurance through certain agencies when they go for loans. Many agents have lost clients they had nurtured over the years,” said Bima chairman Washington Ndegea. In November 2010 the Insurance Regulatory Authority issued guidelines on bancassurance that prohibit banks from using coercion to get clients.

There are about 4,000 registered agents across the country with an unknown number operating illegally. The agents have largely operated without an association over the years.