Allow banks to sell cover, State urged

The government has been urged to amend the Banking Act to allow banks to directly sell insurance products in what is known as bancassurance.

Currently, banks act as agents of insurance companies because the Act, which governs the operations of the country’s banking industry, limits banking to deposit taking and lending activities.

“My appeal to the government on behalf of the insurance industry is to expeditiously amend the Act and legalise bancassurance,” CfC Life Insurance Company head of sales and marketing Ezekiel Owuor said on Monday.

CFC Life is part of the CFC Stabic Holdings Ltd, which also owns CfC Stanbic Bank, Heritage Kenya and CfC Financial Services Ltd.

Mr Owuor said the move will increase the country’s overall insurance penetration currently at 2.6 per cent compared to 14.6 per cent in South Africa.

This is because banks have already established trust with consumers and developed a wide distribution network.

Ideal environment

“With their existing customer base, banks provide an ideal environment for marketing of insurance products,” he said during an insurance brokers and agents breakfast meeting held at the Serena Hotel in Nairobi.

“We need to increase channels through which we can distribute our life insurance products. But the regulatory framework has to be supportive of these endeavours,” CFC Life Insurance managing director Abel Munda said.

Singled out

They singled out Spain as one of the country’s where bancassurance has taken root with up to 70 per cent of new life and pensions business sold through banks.

Despite the industry expecting the amendment to be introduced in this year’s budget, Finance Minister Uhuru Kenyatta only talked about branchless banking.