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Finaccord’s report titled Bancassurance in Kenya: Current State and Future Perspectives to 2020, plus the PartnerBASE™ and market data file that accompany it, provides comprehensive and detailed insights into the prospects for bancassurance in Kenya.

In addition to offering a review of key macro-economic metrics in Kenya, the research also provides a background to the banking sector through the following information: identification of the ten largest banks by number of retail banking customers; data to illustrate the development of the banking market including number of fully-licensed banks, deposit accounts, branches and ATMs and how each of these have developed since 2005; and review of the value and growth of the consumer mortgage and non-mortgage lending market.

The research then focuses specifically on bancassurance with commentary in several areas: the regulatory environment and general importance of banks as an insurance distribution channel; the insurance product range, operating models and bancassurance partnerships of the ten leading banks; and future outlook for the value of the life and non-life insurance market of Kenya through to 2020.

Table Of Contents

Bancassurance in Kenya: Current State and Future Perspectives to 2020
TABLE OF CONTENTS
0.0 EXECUTIVE SUMMARY ... 1
1.0 INTRODUCTION 3
What is this report about? .. 3
The development of the bancassurance channel in Kenya is the focus of this report 3
Rationale . 3
Sub-Saharan Africa hosts a number of fast-growing financial services markets… 3
… with bancassurance poised to grow in several of these .. 4
Methodology ... 4
Macro-economics, banking and insurance sectors .. 4
Survey of banks .. 4
Market data . 5
Definitions ... 5
Investment-related life insurance ... 5
Retirement savings . 6
Risk life insurance ... 6
Accident insurance . 6
Health / hospital cash plans ... 6
Medical expenses insurance .. 7
Personal motor insurance .. 7
Household insurance .. 7
Creditor insurance ... 7
Travel insurance . 7
Agricultural insurance . 8
Commercial insurance 8
Mortgages and consumer finance . 8
Weighted provider share of partnerships .. 8
Operating models ... 9
Abbreviations and exchange rates 9
PartnerBASE .. 9
Finaccord .. 10
2.0 MARKET ANALYSIS ... 11
Macro-economic background .. 11
Gross domestic product and purchasing power parity (PPP) 11
Kenya's economy has enjoyed positive progress in recent years . 11
…albeit poverty and a high mortality rate remain key challenges . 11
Total population, age structure and level of urbanisation ... 12
By 2020, there are likely to be well over 50 million people living in Kenya… 12
… with the vast majority still residing in rural areas 12
Political risk 14
Politically, Kenya has become somewhat less table in recent times… . 14
Other key indicators .. 15
… albeit life expectancy at birth has improved quite markedly .. 15
The use of mobile phones to make financial transactions is extremely widespread in Kenya… . 16
…with M-Pesa having been particularly influential in this respect . 16
Introduction to the banking sector ... 18
Structure of the banking sector 18
Indigenous banking organisations enjoy a strong foothold in the Kenyan market… 18
…with the country's three largest banks originating in Kenya itself ... 18
Co-operative Bank of Kenya has the most customers followed by Equity Bank Kenya and KCB ... 18
Development of the banking sector . 20
The number of fully-licensed banks changed little between 2005 and 2013… . 20
… but other metrics, such as the number of branches, ATMs and bank deposit accounts, all soared ... 20
Consumer lending . 22
While still small, Kenya's mortgage market grew at a fairly consistent rate from 2009 to 2013… ... 22
… even if home ownership is still limited to the highest income groups 22
Non-mortgage lending balances per capita remain higher than mortgage lending balances per capita . 23
Introduction to the insurance sector 24
The total insurance market in Kenya more than doubled in value between 2009 and 2013… 24
… with life insurance slightly out-performing non-life insurance 24
The bancassurance market . 28
Regulatory environment ... 28
Compared to some other sub-Saharan countries, Kenya has a well-defined regulatory framework… ... 28
…whereby banks have to set up an insurance agency in order to distribute insurance products ... 28
Importance of bancassurance as a distribution channel 28
Kenyan banks control a very significant distribution share of the country's life insurance market ... 28
Product range, operating models and partnerships of the ten leading banks ... 28
All ten leading banks offer some type of insurance with stand-alone policies available from five of them ... 28
Four insurance policy types are on offer from each of the leading ten banks ... 29
Accident and commercial insurance are the most popular stand-alone options ... 29
Joint ventures constitute the most regularly used bancassurance operating model in Kenya . 30
CIC benefits particularly from its partnership with Co-operative Bank of Kenya ... 30
…and Britam has established partnerships with three of the top ten banks . 31
Fourth-ranked Chase Assurance is the sole captive underwriter .. 31
Future outlook ... 34
Relative to 2013, the Kenyan insurance market may have tripled in value by 2020 34

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY ... 1
Bancassurance in Kenya: key data points 2
1.0 INTRODUCTION 3
2.0 MARKET ANALYSIS ... 11
GDP in current prices and PPP (purchasing power parity) per capita in Kenya, 2008 to 2020 (forecast) .. 12
Total population and level of urbanisation in Kenya, 2008 to 2020 (forecast) .. 13
Population age structure in Kenya, 2014 13
Index of political stability, regulatory quality and rule of law in Kenya, 1996 to 2012 ... 15
Life expectancy at birth in Kenya, 2005 to 2013 16
Mobile phone subscriptions, fixed broadband subscriptions and fixed phone lines per 100 people in Kenya, 2005 to 2013 . 17
Other key indicators for Kenya, 2005 to 2013 (table) . 17
Ultimate holding companies and credit ratings of the ten largest retail banking organisations in Kenya, 2014 .. 19
Total assets, number of customers and number of branches of the ten largest retail banking organisations in Kenya, 2014 . 19
Number of fully-licensed banks and deposit accounts in Kenya, 2005 to 2013 ... 20
Number of branches and ATMs per 100,000 adults in Kenya, 2005 to 2013 .. 21
Key banking sector indicators for Kenya, 2005 to 2013 (table) . 21
Residential mortgage lending balances outstanding in Kenya (absolute and per capita), 2009 to 2013 ... 22
Consumer non-mortgage lending balances outstanding in Kenya (absolute and per capita), 2009 to 2013 ... 23
Key data points for the consumer lending market in Kenya, 2009 to 2013 (table) ... 24
Gross written premiums for life and non-life insurance in Kenya, 2009 to 2013 .. 25
Gross written premiums per capita and as percentage of GDP in Kenya, 2009 to 2013 26
Gross written premiums for life and non-life insurance in Kenya, 2009 to 2013 (table) ... 26
(table) 26
Segmentation of non-life insurance gross written premiums in Kenya, 2013 ... 27
Involvement in bancassurance of the ten largest retail banking organisations in Kenya: provision of bundled and stand-alone products, 2014 ... 29
Overview of provision rates for different types of insurance offered by the ten largest retail banking organisations in Kenya, 2014 .. 30
Bancassurance in Kenya: provision rates, weighted operating models and weighted provider share of partnerships, 2014 ... 32
Summary of use of captive and joint venture bancassurance partners by the ten largest retail banking organisations in Kenya, 2014 .. 33
Summary of use of external bancassurance partners by the ten largest retail banking organisations in Kenya, 2014 . 34
Forecast for gross written premiums for life and non-life insurance in Kenya to 2020 . 35

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