UK-headquartered private medical insurer Bupa Global has opened its first Africa office in Kenya as it eyes expansion of its services in the continent.
The setting up of the Nairobi office comes after clearance from the Insurance Regulatory Authority (IRA) for the insurer to operate in the local market.
The Business Daily spoke to Bupa Global Managing Director Anthony Cabrelli on how it plans to use Kenya as its launch pad for Africa as it expands its international private medical insurance (IPMI) cover, which allows individuals and families living or travelling outside their home countries to access healthcare across multiple countries.
Why did Bupa settle on Kenya as the first African market to set up a physical office?
We have always had a really strong relationship in Kenya. Kenyan customers have come to us asking for policies. We have come to the country before to understand better the needs of Kenyan customers, while working closely with our medical providers.
Based on that great relationship, we took the decision that Kenya really requires a better service proposition, and, therefore, we are now investing in creating our own operations here for the Kenyan market and Africa.
Kenya is where we have the highest demand for our products and services, and where we see the greatest opportunity to work with providers and distributors in improving the service that we have today and creating more.
What was data telling you about Kenya in particular, as you were thinking about Bupa and the African strategy?
The first thing is the history of the relationship that we have had with Kenya. The first customers across Africa that we had were from Kenya and that relationship has continued to grow successfully.
We do see other opportunities in other parts of Africa, but we really want to start it from a solid and trusted foundation, and we think Kenya for us is the best place.
Once we are successful here and we have built out a model, I think the plan would then be to extend that and see how we can then take advantage of that initial investment in growing to surrounding markets which have similar characteristics.
Kenya is a market you have been serving even without having an office. What advantage does having an office here throw your way?
There is only a certain amount that you can develop from a distance if you really want to understand a market. The closer that you are to a market, the more understanding that you will have relating to customers' needs.
The second aspect is our relationship with our partners such as brokers. Being here is a bigger commitment to that relationship, support and trust.
We see a great opportunity that we want to make a further investment in making sure that we are building an operating centre here locally that is relevant to their local needs, to support our customers and brokers and to work with the medical providers.
We believe by giving a more localised and instantaneous response and service, our products will be more aligned to the specific needs of global healthcare but from a Kenyan lens, and we will be able to adapt to the needs of the market and hopefully grow.
We bring a lot of global healthcare experience from all our businesses around the world but it is also an opportunity for us to learn from Kenya. It is the start of a two-way relationship.
Could you explain Bupa’s focus on international medical insurance?
The global medical insurance policies are providing individuals, expatriates, high net worth individuals and companies with healthcare solutions. It gives them access to healthcare, whether it is primary, secondary or tertiary around the world.
For example, if you happen to live in Kenya, but actually your work takes you to the UK or South Africa or somewhere else, you are going to be comprehensively covered. And that is quite a complex proposition, because we are talking about different languages, different healthcare systems, and different currencies.
Many local insurers are struggling to post underwriting profits from medical insurance. Are you planning to disrupt the local market or will you focus only on international insurance?
As far as the next three years are concerned, our focus is really around international medical insurance. But as part of our development plan, we will be thinking about how to develop our products and services.
We can see opportunities around regional medical insurance plans. And then at some stage, we will then take that learning and see if there is room to set up clinics. In other markets, once we have got to a certain size, we start building and investing in clinics.
So we will typically start off from where our core capabilities as Bupa are— medical insurance. But once we are successful, we will look at other opportunities to expand our offering depending on customer needs.
What has been the size of investment so far in Kenya and what are the plans going forward?
We have an annual operating plan in the three-year plan we have submitted to the regulator relating to Bupa operations. At the moment the investment plan is a little bit sensitive because it is with the regulator and with ourselves.
But the focus is on improving our network. Over the next three to five years, I would expect our business [in terms of revenue] to grow here (Kenya), probably in the region between 15 to 20 percent per annum.
In terms of numbers, at this point, we can only talk about our global strategy. So over the next three to five years, we will be investing in the region of £55 million (Sh9.16 billion) on digitizing all our systems.
The investment we are making in systems will enable us to provide much better digital solutions and also allow us to be far more flexible in terms of the products that we can launch. Within that framework of investment, we are also going to be looking at data and artificial intelligence.
What is going to be your strategy in Kenya and Africa to grow the uptake of your insurance products?
We already have well entrenched relationships with key brokers in the marketplace. We have other intermediaries that we have not worked with approaching us, looking for a relationship. We are going to be selective in making sure that we have got a good basis of working principles with those new brokers.
We want to make sure that everyone is trained. We want to ensure that our products are relevant. We are coming up with some new products as part of the transition, and then I think there will be further opportunities over the medium to long term, around how we work with new distribution channels.
There is also an opportunity to work with other organisations including banks for bancassurance but it is going to be a step-by-step approach. It is not going to be a revolution.
How do you plan to price your premiums given the sensitivity of customers on prices?
Our pricing is very much based on risk. The opportunity for us is to understand risk at a more granular level, especially when operating locally.
We believe in a sustainable pricing model. Sometimes within the competitive open marketplace, you will see pricing strategies from insurance companies that typically discount in the first year, with jumps in premiums in the subsequent years. We believe that that is not a sustainable pricing model.
We want to be as consistent as possible. We are conscious of medical inflation, and we want to make sure that our product remains sort of value-focused and sustainable. We price for continuity. We want a long-term relationship with our customers and with our brokers.
