Ethiopian Business Review

U.K’s insurer, Old Mutual expects to sell more life insurance in Kenya as Industry Grows

Old Mutual Plc (OML), the U.K.’s third-largest insurer by market value, expects to sell more life-insurance products and begin offering general coverage in Kenya, where premium income may double by 2017.

The company, based in London, will use the 31 branches and 100 service outlets it acquired last month when it bought Faulu Kenya Ltd., a microlender, to increase sales of life-insurance policies, said Peter Muthoka, chairman of Old Mutual Asset Managers (Kenya) Ltd. “We are talking about banc assurance, that is what is going to help in selling our products,” said Muthoka, 70, a former chairman of Kenya Commercial Bank Ltd. “The growth in the economy coupled with financial awareness is expected to increase uptake of insurance products.”

Total premiums in Kenya’s insurance industry are forecasted to grow to USD 2.6 billion by 2017 from USD 1.3 billion last year, according to Business Monitor International, or BMI, the London-based research group. The economy, East Africa’s largest, is forecasted to grow by 5.8pct this year from 4.6pct in 2012, according to the government.

Life premiums per capita are expected to grow 75pct to USD 17.4 in the next five years, BMI said in a report last month. Non-life premiums are forecasted to expand 70pct to USD 34.9, bringing total income for that portion of the industry to USD 1.7 billion by 2017, it said.

Some of the products being considered include cover for the oil, gas and marine industries, Muthoka said. Kenya is expected to become an oil exporter in 2016, following Tullow Oil Plc (TLW)’s discovery of crude last year.The company also plans to begin operations in Uganda and Tanzania, to tap into the economic expansion in the two nations.“I believe that Kenya and the wider East African region hold great potential to enable us to further deepen life insurance penetration, which is still at its emerging stages,” Muthoka said.

Old Mutual already has operations in South Africa, where it was founded 168 years ago,Namibia, Zimbabwe, Swaziland, Malawi, Botswana and recently Nigeria and Ghana. (Bloomberg)

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