Faced with thinning profit margins amid heightened regulation, insurers are now vying for new revenue streams away from non-traditional segments.
Underwriters last year posted declining returns to shareholders for the third year in a row as new rules on valuation and a tough operating environment hit the industry.
Data released by the industry watchdog shows returns on equity (ROE) stood at 7.91 per cent for general businesses compared to 12.02 per cent in 2015 and 18.23 per cent in 2014.
Similarly for life businesses, Insurance Regulatory Authority shows ROE stood at 14.36 per cent last year compared to 5.07 per cent in 2015.
And now insurers are setting their sights on schools as they diversify their business beyond traditional revenue streams such as motor vehicle and life cover.
Last week, Kenya Orient Insurance announced it is seeking to increase its share of the growing market for insurance services to learning institutions.
The firm has unveiled a new cover named ‘Orient School Pack’ targeting schools and other learning institutions.
Motor insurance still, however, constitutes a significant chunk of Kenya Orient’s business portfolio.
The company has also announced plans to target growth in new segments such as marine, agribusiness, livestock and real estate.
According to Kenya Orient chief executive Muema Muindi, the new cover offers clients “a bouquet of benefits under one policy” as opposed to signing up with different insurers to cover risks such as fire, burglary, motor accidents and personal injury.
Bird’s eye view
The firms’s new product covers learning facilities, students, farms, vehicles, livestock and crops as well as personal and group accident for learners and non-teaching staff.
“Orient School Pack is a complete insurance solution to cater for the needs of the school, staff and students. It eliminates the administrative burden of arranging separate classes for each class of insurance and gives the school management a ‘bird’s eye view’ of what is covered,” said Mr Muindi.
Kenya Orient has until now been selling a specialised insurance solution for schools called ‘Orient Transchool’ covering school buses and vans.
“With ‘Orient School Pack’, however, schools can now enjoy wide coverage against riots, fire injury arising from outdoor activities and ambulance rescue services during events such as sports and festivals. It will also indemnify directors and mangers of learning institutions against legal claims lodged against them in their official capacity,” explained Mr Muindi.
Last June insurance and financial services firm CIC Group, rolled out a set of products targeted at learning institutions in what it termed as diversifying its customer base.
They targeted primary and secondary schools with a series of products for students, staff and school properties.
“Some of the products with which we are targeting the education sector include Schoolguard for property insurance, students’ personal accident, work injury benefits, principals’ medical, pension and investment covers,” CIC Insurance Group chief executive officer Tom Gitogo said then.
He unveiled the products during the Kenya Secondary School Heads Association (KESSHA) meeting held in Mombasa last year.
In 2015 Prudential Insurance introduced a product that covers school fees should death occur or the child attains a certain agreed age as per the policy.
According to the Insurance Regulatory Authority, in 2016 insurance premiums registered a growth of 12.3 per cent largely driven by growth in the life sector.
This was an accelerated growth compared to 9.9 per cent witnessed in the previous year.
The life sector grew by 19.3 per cent compared to 8.5 per cent growth in the non-life segment.
The insurance industry asset base was Sh525.25 billion as at the end of December 2016. This was a growth of 10.1 per cent from Sh477.22 billion held as at the end of the previous year.