• The bank shrugged off a tough operating environment due to the coronavirus pandemic, to record increased uptake of insurance products through its bancassurance unit.
• Bancassurance is the selling of life assurance and other insurance products by banks, usually through a partnership with an insurance company.
Faulu Microfinance Bank has seen significant growth in its bancassurance business following successful automation of its insurance sales last year.
The bank shrugged off a tough operating environment due to the coronavirus pandemic, to record increased uptake of insurance products through its bancassurance unit.
Overall sales from the bancassurance agency have so far hit Sh327 million this year, a 31 per cent growth compared to a similar period last year, driven by strong demand across the general and life insurance segments, as well as automation of services to boost efficiency.
Faulu, a subsidiary of UAP Old Mutual Group, a diversified listed financial services firm, also posted an increase in income and commissions from its bancassurance agency.
Faulu Bank CEO Apollo Njoroge attributed the significantly improved performance in the bancassurance agency to enhanced operational efficiency, convenience and speed of service due to automation of processes.
Bancassurance is the selling of life assurance and other insurance products by banks, usually through a partnership with an insurance company.
Last year, Faulu completed automation of its bancassurance operations at its more than 60 branches countrywide.
The Rensoft system facilitates quick quotations and faster processing of insurance covers as well as processing of insurance products underwritten by UAP Old Mutual Group and other licensed insurance companies in Kenya.
Njoroge said the positive results from the bancassurance operations underline the pent up need for insurance products in the market they serve.
"Our decision to automate our bancassurance operation is finally paying off. Our customers can access a wide range of insurance products through a simple but efficient process.
"We are now able to issue motor certificates in less that ten minutes at many of our branches and will soon rollout this out to all our branches countrywide," Njoroge said.
Faulu is banking on digital innovation, expanding client base and higher uptake of insurance to strengthen its bancassurance business.
Recently, the bank launched a digital banking app called: Faulu DigiCash App.
This app allows its retail and business clientele to access cashless banking from anywhere, anytime, as the Bank ramps up its strategic focus on technology to drive value and better manage customer relationships.
The bank is enriching the Insurance capability in the app to have more value adds and include a digital premium financing to offer easy and flexible installment payment options to support customers more so in this tough economic times.
Faulu says it is targeting to reach one million customers within a year (both existing and potential) as it rolls out its technology strategy which has digitized its entire operations.
The bank has upgraded and launched an electronic data management system, a customer relationship management system, an agency banking app and upgraded the USSD platform.
“Bancassurance is an important part of our service offering because it helps our customers protect the wealth they have worked so hard to create. We plan to sustain this positive momentum in our bancassurance offering through innovation and by focusing on the financial needs of our core market,” he explained.
"We continuously review our service offerings to create bespoke insurance solutions suited to our clientele."
The growth in uptake of insurance products in spite of the negative impact of the pandemic clearly demonstrates the role of technology in increasing insurance penetration in Kenya, where less than 3 percent of the population have access to formal insurance.
Adoption of bancassurance by banks and microfinance institutions, coupled with innovative distribution systems, is seen as a way of deepening insurance coverage.
“Automation is part of the wider digital shift redefining insurance. At Faulu, we have made it easier for our customers to buy insurance products that meet their needs and expectations,” he continued.
Faulu is already strengthening its SME banking business, a move it anticipates will drive further growth of its bancassurance arm.
Njoroge added that there is ample headroom to sell insurance products to their expanding SME clientele with products covering construction, fire, burglary, machinery, goods-in-transit, public liability and personal accident.
"We are also soon launching insurance Bid, Performance and Advance payment guarantees with select insurers. These solutions are targeted at supporting our trade finance ambition giving our clients options in structuring their facilities. We will also aggressively cross sell Biashara Flexi- a one of a kind life product from OldMutual for employees (SME and Corporate) to address their Life Insurance needs,” Njoroge concluded.
Apart from life assurance, Faulu’s bancassurance services also include medical, agriculture, motor, business/SME and other general insurance products. Sales of general insurance this year have reached Sh212 million compared to Sh145 million in the same period last year highlighting the impact of digitization of processes on the bottom line.
With its over 400,000 customers and wide network comprising over 60 branches and 500 agencies across the country, Faulu also offers an Insurance Premium Facility (IPF) to customers.
Being part of UAP Old Mutual Group, which includes UAP Insurance, Faulu is also able to leverage the parent company’s strong brand and network in the financial services sector to sell insurance products.