Patience SAGHANA
Kenya provides evidence that the insurance industry can thrive in Sub-Saharan Africa in face of highly challenging economic and – especially – political problems. As of the end of 2008 the combined assets of Kenya’s 42 insurers amounted to KES146.12bn – or nearly US$2bn.

Both the non-life and the life segments have had sustained double-digit growth over the last five years. One does not need to make aggressive or radical assumptions to produce a scenario where the double digit-growth continues through the forecast period.

The development of the life segment is particularly encouraging. Life premiums account for about onethird of the total. Notwithstanding the fact that Pan Africa, the largest player in the segment, with a market share of around 20%, has a strategic alliance with a subsidiary of South Africa’s Sanlam, the segment is dominated by local firms.

In essence, Kenyan institutions are gathering long-term savings from Kenyan investors. In this respect, Kenya is hugely different from Nigeria, and even from much richer and more stable countries in the Middle East.

As is the case in the Middle East – and to a lesser extent in Nigeria – the insurance industry is strengthened by its links with local entrepreneurs.

In 1980 the government introduced laws that required local ownership of the insurance companies. As a result, insurers have since tended to be owned and/or run by local entrepreneurs with a deep understanding of the challenges of doing business in Kenya and well developed tolerance for risk.

A side effect – probably unanticipated by the government nearly 30 years ago – is that Kenya’s insurance sector is fragmented.

In this respect it is similar to its counterpart in Nigeria, but also the Philippines and Indonesia or the UAE, where local entrepreneurs often see insurance as a valuable adjunct to the other activities undertaken by the family conglomerate. The three largest non-life companies –

The Jubilee, APA and Kenindia together speak for about one-quarter of total premiums written in the segment. APA is the consolidation of Apollo with Pan Africa’s non-life operations. However, there is scope for much more consolidation.