Julia Nechesa Shisia is the Principal Officer and Executive Director of Absa Bancassurance Intermediary Limited at Absa Bank Kenya. She has over 20 years of executive experience across banking, insurance, and sustainable business practices. In this interview with SEGUN KASALI, she assesses the level of insurance penetration, compares that of Kenya to Nigeria and many other issues.
Briefly tell us about Absa Bancassurance?
We distribute insurance for the bank’s customers, partners and stakeholders. So, we work with insurance companies and partners to protect and mitigate risks people are exposed to locally, regionally and globally.
Why is Absa Bancassurance attending the United Nations High Commissioner for Refugees (UNHCR) meeting on IDPs?
We are attending this meeting because this is a group that is sometimes overlooked but they have financial needs. Most of the times they are in a situation where they can hardly access the solutions that we offer. Having identified that and realising the challenges surrounding the special population, then we developed solutions with partners, telcos, insurance companies and many others that we work with so that we can reach the unreached and leverage on technology. I will give you an example. In Kenya, we have Integrated Population Registration System. This contains the details of everyone living in Kenya. Initially, banks may not be able to offer you some of their services because they don’t know you. But, when they go to that system, you will appear and then they can identify you. On top of that, we have telecommunications companies who provide numbers. If you have a safaricom for instance, we as a bank will create a wallet so that the person can be able to transact i.e they can borrow, save, take up insurance policy and do many financial services. So, that is how partnerships work. And now because they don’t need to have a smart phone to do that, we have enabled the cheapest of the phones to be able to do that. We are also looking at how do we partner with Safaricom to provide those cheap phones. So, they need funding from the banks for them to be able to give these gadgets to a bigger population. Then, we have bigger interconnectivity.
What is the concept ‘Bancassurance’?
Let me give you a brief history. Banks were doing a lot of lending. At some point, you know people lose their assets and banks will go and repossess and you rely a lot on external insurance. And sometimes, they don’t really have a proper insurance for coverage. You know when that happens, we will take the asset because it is a collateral. So, the banks decided what can we do to actually make sure we sustain our customers? So, why don’t we cover the risks that we are insuring. So, banks started the Insurance to actually help the customers to mitigate their risks. And we do it internally because we understand the risk more from the time the customer is walking in to our door to the time they are even borrowing and how they are growing. We have the records. So, we are able to redistribute for insurance companies and we are able to tell them who this customer is because they have not interacted with this customer. We tell them we know this customer from this point to the other and the risks they are exposed. Then, they give the right solutions and the banks write on those solutions. So, should a risk happens to our customers sometimes they would die, sometimes they fall ill and sometimes maybe the companies’ profits are shaken due to political instability and we have got all these covered. So, we make sure those are the risks we are providing solutions to.
Are you saying availability of data makes Insurance thrive in any given country?
You are absolutely correct. Data is a very perfect tool. It helps us to analyze a lot of behaviour and targeted conversations with these customers. Remember that the Kenyan population is roughly 56 million not as big as Nigeria. So, let us say Safaricom has 40 million subscribers. That is data. So, if we have that data and a lot of behaviour, the better it is. Banks also have a lot of data. Let us say 70 or 80 percent of the population is banked, that is data. So, once you have the data, it is you that know what to use it for.
What factors increased insurance penetration in Kenya?
The Factor that has helped insurance penetration in Kenya is actually education. Of course, we have a lot of financial literacy. We talk to the people. Of course, we are not where we need to be. And then, there is accessibility. The only other avenue to do better is the affordability. Insurance premium generally are paid annually. So, if we want to do, it becomes difficult for someone who wants to start that. It may be that they want for three months, six months or maybe they want for one year but they don’t want to pay in full. So, those are some of the things we are doing and we also going into. We are also creating solutions that are affordable to the masses. Kenya is about three percent below the global seven to ten percent.
How do you think Nigeria can increase its level of Insurance penetration?
With about 200 million people, it is huge. 20 percent of that population is forty percent. When I see a population like this and still have low insurance penetration, it pricks my heart because I know the power of insurance. I give you an example. A man has a lot of dependents and God forbids the man loses his life, the family would have to do fundraise which is not bad but insurance would have come in. When you insure your house for instance, your television, gadgets and some others are also insured. In the event of eventualities when you don’t insure it, you would have use ₦400,000 or more to buy the phone back. If you have insurance, you don’t have to go to your bank. The savings would have been used to take care of something else. That is the power I see and pray that every household in Africa will take some insurance today. So, it is important for all stakeholders in Nigeria such as the government, private sector come together to have conversation about insurance. The capacity can be built locally. The population needs to be educated about insurance and why they need it. I am sure if they understand it, they will go for it. The Regulator should take a forefront approach to it. I can tell you some of the things we have done in Kenya. The regulator has actually taken training across the country. They are supporting licensing and risk based insurance companies that have these risks for the population. They prevent them from not collapsing and not losing. There is a fund the regulator has created for compensation when the company is going down. So, it is a joint effort on the part of the government and the stakeholders.
How can insurance companies leverage on Artificial Intelligence?
Artificial Intelligence is a very good one. Let me give you an instance. We have accidents today. In Kenya, we send an assessor when somebody’s car has an accident. The Assessor will see the damage and give an estimate of how much it would take to fix the vehicle. All these are manually driven. With Artificial Intelligence, it goes in and takes the picture of that car and quickly estimates the cost. Within seconds, you have the information.
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