Under Dr. James Mwangi, Equity Group has not only transformed banking in Kenya but is now set to redefine the rather unexplored insurance business across East Africa.

Building on a legacy of financial inclusion and trailblazing banking practices, the Group’s 21-month foray into the insurance sector is showing promising early signs of success.

Since its establishment, Equity Bank has been a catalyst for inclusive banking, revolutionizing access to financial services for some of Kenya’s most marginalized groups. By introducing low deposit and no-charge accounts, Equity successfully brought informal sector workers, such as mama mbogas (vegetable vendors), into the banking fold. This success in banking provided a robust foundation for its expansion into the insurance sector in 2022.

Launched just 21 months ago, Equity Life Assurance is poised to mirror this disruptive trend in the insurance industry. With over 1.27 million unique customers and impressive year-end assets totaling Kes19.2 billion as of December 2023, Equity Life Assurance is quickly making its mark.

The company reported a profit before tax of Kes934 million, a return on average equity of 70.4 percent, and a return on average assets of 5.4 percent for the year ending December 30, 2023.

Equity Life Assurance (Kenya) registered an increase of 57 percent year-on-year in total revenues to Kes1.67 billion up from Kes1.06 billion in FY22.

“This increase is due to the increase in earnings from the current business as well as previously unearned premium reserves,” analysts at Genghis Capital noted.

What’s more, the insurer has also been able to increase the number of cumulative policies issued to 9.9 million with the average number of policies issued per month over the past month being 1.27 million.

Such robust performance indicators suggest that Equity Life Assurance is on a trajectory for rapid growth and substantial market influence in the region.

Read also: Equity makes inroad into Kenya’s insurance sector

Market positioning and expansion

As of September 30^th, Equity Life Assurance had already captured 2 percent of the life industry market share, ranking 13^th in the industry, and 7 percent of the group life and credit market share, placing it 6^th in the industry. This performance is indicative that Equity’s strategies are paying off and that there is potential for further growth in the sector.

Dr. Mwangi has announced that the group plans to venture into health and general insurance later this year. According to the CEO, this business expansion aligns with Equity’s broader mission of driving social inclusion to ensure that “no one is left behind.”

By integrating banking, insurance, and technology services, Equity aims to create a vast economic value ecosystem that supports the underserved populations across East Africa, Dr. Mwangi explained.

Addressing low insurance penetration

The potential for growth in the insurance sector is huge, particularly in East Africa where insurance penetration remains critically low. Equity, buoyed by latest recognition of being the second strongest bank globally, as rated by Brand Finance, is taking on insurance, an industry where the uptake of cover products in the region is very minimal.

Kenya, the leader in the region, has an insurance penetration rate of only 2.3 percent, followed by Tanzania at 1.68 percent, Rwanda at 1.6 percent, Uganda at 0.8 percent, and the lender’s new frontier market, the Democratic Republic of Congo, at a mere 0.4 percent.

However, Dr. Mwangi sees this as a significant opportunity for Equity to make a difference. By applying the same principles that made its banking model successful—accessibility, affordability, and inclusivity—Equity aims to enhance insurance coverage across the region.

The introduction of relevant, easy-to-understand, and accessible insurance products could serve as a catalyst for increasing the uptake of cover services.

Challenges and opportunities

The journey to increasing insurance penetration in East Africa will not be without challenges. Equity must devise strategies to surmount barriers such as low financial literacy, cultural skepticism towards insurance, and the predominance of informal employment that does not typically provide insurance.

However, Equity’s track record of overcoming similar challenges in the banking sector provides a hopeful outlook for its insurance endeavors.

Additionally, the integration of technology in its insurance services could replicate the success seen in its digital banking initiatives. By leveraging mobile technology and digital platforms, Equity appears set to reach a broader audience, streamline the process of acquiring insurance, and manage risks more effectively.

This tech-driven approach could be particularly effective in reaching a young, tech-savvy population that has traditionally been underserved by conventional products.

A visionary bet on inclusive insurance

Equity’s foray into insurance sector under Dr Mwangi easily comes out as a timely move that promises to transform societal norms about insurance and financial security.

With a strong start, Equity Life Assurance provides yet another chance for observers to monitor how Equity Group might tap its expertise in powering banking into writing the next chapter about insurance in East Africa.

By addressing the critical gaps in the market, Equity Group has a chance to build a more resilient and financially inclusive future for the region. This pursuit for inclusive growth will potentially set Equity apart and underpin its potential to change the uptake of cover products across East Africa.

"The group anticipates further growth in the market as it plans to continue leveraging on it brand to penetrate the insurance industry that currently averages a penetration rate of 1.34 percent in East Africa," analysts at Genghis Capital explain.

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