MICROCAPITAL BRIEF: As Kenyan Insurers Look to Follow Microfinance Lead, Equity Bank and Safaricom Collaborate to Expand Mobile Payment Methods to Microinsurance

According to BusinessDailyAfrica, a news website based in Nairobi, Kenyan insurers are looking to reach the low-end income market through intermediaries such as microfinance institutions (MFIs), sometimes via customers’ mobile phones. Equity Bank, a Kenyan microfinance bank, and Safaricom, a provider of communication services, have launched a mobile-based platform that will allow users to make weekly insurance payments of about KES 10.2 (USD 0.13) to Equity Bank via mobile phone. While an insurance company partner has not been chosen, eight companies have been selected to bid on the right to participate.

Equity bank will use the experience from its ‘bancassurance unit,’ the selling of health, life, and personal accident insurance through the bank, which last year earned KES 1.2 billion (USD 14.7 million). “The bank’s marriage with Safaricom is likely to increase the uptake of micro insurance judging from the previous performance of Equity’s bancassurance,” said Isaac Ngaru, an insurance consultant with Ngaru & Associates.

“Collection of insurance premiums and payment of claims is one of the major challenges of the insurance sector and the ability to do these through mobiles will cut costs and reduce customer inconvenience,” said Joseph Kameri, the marketing and distribution manager at UAP, an African insurance provider.

As reported by MicroCapital on June 2, 2010, Safaricom and Equity Bank have already introduced M-Kesho, a mobile banking product that will offer banking services including money deposit, cash withdrawal and loan access.

By Matthew Fox, Research Associate

About Equity Bank:

Equity Bank, founded in 1984, is a microfinance bank based in Nairobi, Kenya. It provides loans, savings, and fund transfer services, and it is funded through its savings deposits and shareholder capital. It accounts for 52 percent of bank accounts in Kenya with over 4.1 million accounts. It is involved in microfinance operations not only in Kenya, but also in Southern Sudan and Uganda through its subsidiary, Equity Bank Uganda.

As reported to the Microfinance Information Exchange (MIX) Market in 2009, Equity Bank has USD 1.27 billion in total assets, a gross loan portfolio of USD 818 million and 716,000 active borrowers.

About UAP Insurance Limited:

UAP Insurance Limited is an insurance provider based in Nairobi, Kenya, that operates in Kenya, Uganda and Southern Sudan. It was formed in 1994 after the merger of Union Insurance and Provincial Insurance. The company’s products include commercial, life, travel, medical and political violence and terrorism insurance. Additionally, along with Equity Bank, a commercial microfinance bank in Kenya, UAP Insurance has launched a program that incorporates satellite technology to provide herders with insurance for their livestock in the event of drought and subsequent starvation.

Sources and Additional Resources:

[1] Business Daily: Insurance Firms Target Low-End Market via Phones, May 24, 2010:http://www.businessdailyafrica.com/Insurance%20firms%20target%20low%20end%20market%20via%20phones/-/539552/924200/-/item/0/-/nmfc1g/-/index.html

[2] MicroCapital Brief: UAP Insurance of Kenya, Safaricom and the Syngenta Foundation for Sustainable Agriculture to Expand Mobile Microinsurance Program to Kenya, March 31, 2010:https://www.microcapital.org/microcapital-brief-uap-insurance-of-kenya-safaricom-and-the-syngenta-foundation-for-sustainable-agriculture-to-expand-mobile-microinsurance-program-in-kenya/

[3]MicroCapital Brief: One of the Largest Mobile Operators in Kenya, Safaricom, an Equity Bank, a Microfinance Bank, Join Together to Launch Mobile Banking Program, June 2, 2010:https://www.microcapital.org/microcapital-brief-one-of-the-largest-mobile-operators-in-kenya-safaricom-and-equity-bank-a-microfinance-bank-join-together-to-launch-mobile-banking-program/

[4] MicroCapital Universe: Equity Bank:https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Equity+Bank

[5] MicroCapital Universe: UAP Insurance Limited:https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=UAP+Insurance+Limited

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