The introduction of funeral policy marks another milestone for the
insurance industry which has lately done much to shed its traditional
image as a business that thrives on low-chance events.
For close to one month
now, a billboard has been standing opposite the Nairobi National Park,
targeting motorists with a rather queer counsel.
In a
society that hardly imagines, discusses or even plans funerals for the
living, a promo featuring a tombstone with initials R.I.P (rest in
peace) inscribed on it is clearly meant to test the limit of a business.
But
the local insurers, the group behind the commercial, are unapologetic
as they place bet on the untapped potential of funerals to drive growth.
The Association of Kenya Insurers (AKI) has erected the billboard as
part of its consumer education campaign.
“Put your
funeral costs to rest,” the ad screams out. “With as little as Sh100 per
month, you can get a cover worth Sh100,000 to cater for funeral costs
and ease the financial burden for your loved ones.”
And
whatever is not poignant in the words is aptly conveyed in the choice
of the edge of the Langata Cemetery, Nairobi’s biggest burial grounds,
as promo’s location.
The insurers say it is an out all battle. When they are not
erecting billboards and sharing their morbid promos via FM stations,
they are using young people carrying real-size black coffins to deliver
the message to target groups through music, dance and drama.
Apparently
buoyed by a rapid growth of life insurance premiums that hit Sh83.65bn
in 2017 or 13.16 percent increase on the Sh73.92bn collected the
previous year, the pursuit of new business lines is increasingly
becoming aggressive.
Life insurance gross premium
(Sh bn)
2013
2014
2015
2016
2017
Life insurance penetration 3was recorded at 1.05 percent non life was recorded at 1.55%
By drawing the public’s attention to the finality of death — and
the need to start saving early for related expenses such as mortuary
fees, casket, hearse, flowers, funeral programmes and food — the
industry hopes to boost its numbers.
So far, 22 out of
the 26 firms that wrote life insurance last year have added funeral
policy either as a stand-alone product or as part of an existing one
(rider).
From APA’s pumzisha to the last expense cover as it is called by
firms like Britam, First Assurance and CIC; and from what the Jubilee
calls family shield cover to Liberty’s family protector plan, the
industry appears to have drawn the lines.
Under the
arrangements, policy buyers are supposed to pay premiums monthly,
quarterly or annually on a promise that the lumpsum payment will be
released for their final resting ceremony within 48 hours of claim.
If
successful, the industry could raise its life insurance penetration
level beyond the 1.08 percent of the population recorded last year. By
comparison, South Africa, the continent’s most insured market recorded a
life insurance uptake of 11.02 percent while Namibia had a penetration
of 5.37 percent.
“Though picking up, the funeral
product still has a long way to go in Kenya,” notes Mr Tom Gitoko, chief
executive of CIC Insurance. “But at least, it has so far been embraced
by chamas (informal groups) for their members which is a positive
thing.”
In a society where funeral expense is always
taken as the responsibility of the predeceased family members, AKI’s bid
to change the mindsets appears to be a long shot.
Think
of a typical Saturday afternoon, and an open ground that once served as
a local authority market for Bondo, Siaya County, is fast teeming with
people who soon break into smaller meeting groups.
Premiums distribution per class of business
Medical30%
Others24%
Motor commercial18%
Motor private17%
Fire10%
Total:
100
100
Total insurance penetration in Kenya was reported at 2.71% last year
The
people from the town’s estates and surrounding villages gather at the
open ground to raise money for funerals, hospital bills, weddings,
churches and other social causes.
“You only have to pay
for the number of plastic seats that your group needs and that’s what
counts as the rent for the meeting ground,” a grocer identified as Rasto
Onyango once told the Business Daily.
Here in Nairobi,
that deeply entrenched cultural bond appears to respect no ethnic
boundaries as Kenyans huddle in groups every day after work hours to
raise millions of shillings for various causes.
Just a
single mention of death and popular spots like the city’s Garden Square
Restaurant, leading church grounds and a number of secluded hotels come
to mind.
And with advancement in technology, social
media platforms such as Facebook and WhatsApp have come in handy,
allowing smart phone users to raise money at the touch of a button.
The
local insurance industry however maintains its disdain. It wants
Kenyans to forget about handouts and adopt a savings culture.
“Just
like we saw politicians push for the ban on harambees, the cash that
people raise via social networks will soon dry up,” predicts AKI chief
executive Tom Gichuhi “There is already a hint of fatigue as only a few
people show up for fundraisers these days unless it a really for an
urgent case.”
According to Mr Gichuhi, the funeral
cover promotional campaigns of the last three weeks have so far
triggered a great deal of public interest with product enquiries hitting
165 by phones and more than 100,000 on social media.
“The
most peculiar thing about these enquiries is that majority of those
making them fall within the productive 20-35 age bracket,” said Mr
Gichuhi.
Still on the extreme end game, the industry
has to confront a category of people who have chosen to run ahead of the
pack, and neither want to save nor expect contribution for their
funerals.
Think of Kanyadhiang’ village of Karachuonyo,
Homa Bay County, where an empty grave has been waiting for the day the
Grim Reaper comes for its digger— a former top judge.
Critics
may regard the concrete grave that the 75-year-old widow ordered built
to her specifications as an escalation of her eccentricity. That is
because the retired judge once went public about her displeasure with
certain aspects of the Luo culture.
But she may still
influence other people to walk in the footsteps of other prominent
Kenyans such as former Butere MP Martin Shikuku who in 2012 was buried
in a grave he had dug for himself eight years earlier.
Still,
the introduction of funeral policy marks another milestone for the
insurance industry which has lately done much to shed its traditional
image as a business that thrives on low-chance events.
So
far, the general insurance segment has violated the conventional
business limits to start writing the risk of political violence, adverse
weather and, even terrorist attacks.
Official data
however indicates none of these gambles have had a significant impact on
the industry’s bottom line. Data compiled by the Insurance Regulatory
Authority shows that only the marine segment of the general insurance
has since recorded a phenomenal growth in recent months.
The
41.56 growth in marine insurance premium recorded last year is linked
to the government’s directive which took effect in April last year
compelling importers to buy cargo policy from local firms.
As
a result, marine insurance premiums ballooned to Sh3.8bn in the 12
months to December 31, 2017, compared to Sh2.7 billion the previous
year.
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