Safaricom wades into insurance to boost revenues
By MACHARIA KAMAU | January 23rd 2014
By MACHARIA KAMAU
NAIROBI, KENYA: Telecommunications firm Safaricom is angling for the highly untapped insurance market with a low cost health cover. On Wednesday, the operator in partnership with investment firm Britam and Changamka Micro Insurance unveiled a health cover targeting to attract a million customers in the next one year.
Linda Jamii – which has been running on a pilot basis in Nairobi for the last year – targets more than 38 million Kenyans that do not have health insurance and is expected to be a significant revenue stream for the two firms in the coming years.
Customers will pay an annual premium of Sh12 000 for a medical cover worth Sh290,000.
Bob Collymore, chief executive Safaricom, said the product, which has only attracted 8,000 customers in the year it run on a pilot basis, had potential to bring in more than a million customers in the first year alone. This is out of a pool of 38.8 million Kenyans — or 97 per cent of the Kenyan population that do not have access to health insurance and in turn are not able to access healthcare.
Mobile operators have been diversifying into other revenue streams such as mobile money transfers and data to cover-up lost business as the voice segment matures. Safaricom has been pushing aggressively to transform its services to more than voice with the M-Pesa, M-Shwari and other service like linking one’s bank account to the mobile sim card.
“One of the major problems that we have in Kenya is that many people cannot afford quality healthcare… we have evaluated this and developed a product that reaches out to ordinary people,” he said during the launch in Nairobi. Currently there are 630 middle tier hospitals where Linda Jamii customers will be able to access medical services.
The product will use M-pesa as the premium collection platform. Changamka will insure the customers while Britam will be the underwriter. Benson Wairegi, chief executive Britam, said the product had potential to significantly increase its revenues and likely give the industry Sh30 billion worth of premiums within the next five years.
“It is a business line that we feel has potential. We do not expect much in the initial years but once the system is in place we expect it to be a significant contributor to our business,” he said.
“The vast majority of Kenyan population do not have a steady income. Subsequently they cannot afford the premiums of existing medical covers which in essence leaves quality healthcare as the reserve of a privileged few,” said Sammy Agutu, chief executive Changamka.
“Linda Jamii will fill this gap and shutter this medical cover glass ceiling and allow more Kenyans access to better healthcare.”
During Wednesday’s trading, Safaricom share climbed 2.1 per cent to settle at the psychological level of Sh12.
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