Firm takes customer centric approach to selling life insurance
By Tullah Stephen
Recent reports in East African industry have had a lot to say about the numerous changes taking place as well as their corresponding impacts. Competition is intensifying, technology improving and keeping up with these challenges is critical. According to Simba Chinyemba the Principal Officer of Metropolitan Cannon Life Assurance Company Limited (MetCan), only companies that are innovative survive.
Holding enormous untapped potential, Kenya’s insurance industry has grown rapidly over the last decade with both the life and non-life segments showing growth. The growth, according to reports, is supported by the rising middle-class who are increasingly becoming aware of the benefits insurance entails. The sector is however, still dominated by the short-term motor segment, low uptake in life, medical and new micro-insurance products continue to be a challenge. This is attributed to poor attitude towards personal life insurance cover and socio-cultural aspects of life. “This represents an opportunity for people to come in. We believe that life insurance is a space for innovative players. Players who develop products that meet the market demands,” says Chinyemba.
Companies, he explains, have for long struggled to meet customers’ rising expectations. Insurers themselves are known to know very little about their end customers because historically they viewed producers as their customers.
Chinyemba says MetCan is bucking the trend with customer centric approach to selling life insurance. “We have done a market analysis and have identified areas we feel there is room for growth in life insurance.”
Education in Kenya and across the region remains key to the population. However, every year the cost of education seems to go up. And unforeseen tragedies, such as the death of a parent, or financial insecurity, could deny your child their chance of a bright future.
Chinyemba says the company sought to develop an innovative way to cushion families from such an occurrence. “We came up with Metropolitan Education Plus (MEP) which enables their children to continue with their education when one passes away.”
MEP is a unit-linked anticipated education endowment assurance policy that covers children’s education costs both locally and internationally. The policyholders can choose terms of between eight to 20 years. Premiums are payable up to the end of the selected term or death of the life assured. MEP also has partial maturity benefits equal to 15 per cent of the sum assured. The amount is payable at the beginning of each of the last four years before maturity. At maturity, the greater of 100 per cent of the sum assured or the unit account is payable. In case of death during the term of the policy, all future premiums are waived and the benefit is paid as if the life assured had survived to maturity.
“If you ask someone to invest in life insurance their first question will always be whether they will get the money in full amount or less. That is what we wanted to correct,” he says.
The MEP policyholder can also apply for a loan on the above products after a period of three years; something Mr Chinyemba says is not common with insurance companies.
In addition to the education policy, MetCan are also the underwriters of Sema Doc health care solution, available on the mobile phone. The solution allows patients to chat with a doctor on their mobile phone, request a call back, or text a doctor with their health question. Doctors then contact the patient. With a Sema Doc subscription, one gets a Health Account, dedicated to help save for health expenses. Subscribers can also transfer money from their M-Pesa or M-Shwari accounts on their mobile phone and save for medical expenses.
The young executive says one of the more challenging aspects of advising clients about life insurance is helping them recognise that a policy is an asset rather than an expense. “To be honest it is not whether the policyholder will make a claim, rather it is when. If the policy is maintained, the premium payments ultimately result in the policyholder’s receipt of the benefit. The benefit allows a rate-of-return calculation which is not possible with other coverage.”
The other challenge is price undercutting. “The practice of undercutting – charging lower than set premiums – is becoming rampant and poses a serious threat to the profitability and attractiveness of Kenya’s insurance sector.”
Chinyemba says undercutting results in revenue loss that weakens the insurer’s ability to settle claims promptly, eroding business confidence and entrenching negative perception of the industry among consumers.
MetCan’s target is to add innovative products in the next two months. This, Chinyemba says, will help double the company’s market share.
Chinyemba is confident of the industry’s growth, saying Africa’s economy is expected grow at 1.5 per cent in the medium term and this will hopefully see an increase in life insurance uptake.