A life insurance savings plan can alleviate financial fallout from bereavement. PHOTO | FILE
By Matt Lilley
In Summary
- Life insurance companies support sustainable development by mobilising long-term capital such as the money invested in savings products.
As a long-term investor in East Africa, Prudential has a vested interest in sustainable development.
Prudential was established in London in 1848, and the business
was built by offering protection and savings opportunities to people in
the UK who had never before had access to these kinds of services.
Our “penny policies” provided affordable life insurance and gave
people a degree of financial
security for the first time. The policies enabled people to plan for brighter futures for their families. We invested these savings in long-term projects that helped to fuel the dramatic growth of the UK, bringing more jobs and rising prosperity.
security for the first time. The policies enabled people to plan for brighter futures for their families. We invested these savings in long-term projects that helped to fuel the dramatic growth of the UK, bringing more jobs and rising prosperity.
That cycle of protection, saving, investment and more protection
is at the heart of life insurance. Our industry provides benefits to
individuals, and their savings drive investment, which in turn provides
more opportunities for savings.
This view is supported by a study launched in Nairobi this week
by Prudential and the Overseas Development Institute, the UK’s leading
independent development think-tank.
The study concludes that eight unskilled jobs are created for every one high-skilled position in the life insurance industry.
It found that most jobs in life insurance are also taken by
women, a group who can have limited opportunities for well-paid work.
Prudential has built up a force of more than 400,000 agents in Asia over
the past 20 years. It has 200,000 agents in Indonesia alone and half of
them are women.
In Kenya, Uganda and Ghana Prudential is on track to create
thousands of high-quality jobs by 2020. This will support the
development of the middle class and promote further growth.
Communities also benefit. Despite the past decade’s strong
economic growth, over 200 million middle-class Africans remain
vulnerable to economic shocks such as when their main earner passes
away.
An education savings plan from a life insurance company can, for
example, provide cash sums for university or school fees even when a
family’s main earner dies and further payments cannot be made.
Life insurance helps communities to manage these shocks and
alleviate some of the financial fallout from bereavements. Stronger
welfare and security for individuals eases the burden on society as a
whole.
The study also found that life insurance can raise high-quality
funds to support economic growth. Prudential, for example, has invested
$86.7 billion in infrastructure and property in the UK alone.
While other foreign investors in East Africa — particularly
private equity funds and venture capitalists — demand a return on their
investment within five years, life insurance companies can look for
projects with a lifespan of 40 years or more. We expect to invest more
in both markets over the next five years. This investment will create
jobs and attract foreign investment, which in turn will generate more
employment.
Long-term capital
Life insurance companies support sustainable development by
mobilising long-term capital such as the money invested in savings
products. A shortfall in infrastructure spending weakens Africa’s GDP
growth by an estimated 2 per cent a year.
A strong life insurance industry can help bridge this gap by
collecting the savings of local people and investing them in long-term,
local assets such as infrastructure and government bonds.
All over the world, from Jakarta to London, from Hanoi to
Chicago, you can see power stations, roads, bridges and cellphone masts
that have been built using money from Prudential’s local customers.
These investments not only provide returns for our customers. They also help to build more productive and healthy economies.
Life insurance has a key role to play in delivering sustainable
development for East Africa. The study report launched last week has
shown what we have already seen across Asia and in the UK for decades.
Life insurance can raise funds for growth, create thousands of
jobs and provide security for families. It can help to achieve the same
in East Africa and unlock the region’s potential.
Matt Lilley is CEO of Prudential Africa
No comments :
Post a Comment