Bancassurance, the synergistic partnership between banks and insurers, has gained traction locally and globally. It is projected that the global bancassurance market will reach $2,339 million by 2028 growing at a compound annual growth rate of 1.9 percent.
This innovative distribution channel offers a convenient avenue for customers to access insurance products while diversifying revenue streams for banks. However, amid this growth, a crucial aspect remains overlooked—the absence of centralised data at the regulator level.
In recent years, bancassurance has emerged as a promising segment in Kenya's insurance market. With the proliferation of bancassurance, customers now have greater access to insurance products. This expansion is evident in the increasing number of bancassurance arrangements and the rising awareness among consumers regarding the benefits of these offerings.
While the Insurance Regulatory Authority (IRA) plays a pivotal role in overseeing the insurance sector, the absence of centralised bancassurance data threatens the ability to monitor market dynamics effectively. Unlike Uganda, where centralised data is available, Kenya lacks a standard mechanism for reporting premiums, profitability, and other crucial metrics associated with bancassurance transactions.
The lack of data in Kenya underscores the need for a stronger regulatory framework that prioritises transparency and accountability.
Centralised data would provide regulators with detailed insights into market trends, product performance, and risk profiles, enabling them to make informed decisions and formulate effective policies. Moreover, centralised data can enhance consumer protection by ensuring that bancassurance products meet regulatory standards and deliver value to customers.
Uganda, where centralised bancassurance data is readily available. Uganda's regulator publishes annual reports that include detailed information on bancassurance transactions, premiums, and profitability.
This level of transparency fosters trust among stakeholders and facilitates a more conducive regulatory environment for bancassurance operations. Kenya will benefit from adopting a similar approach to centralised data reporting, enhancing market transparency and regulatory oversight.
Centralised data and public disclosure of results for bancassurance subsidiaries are key to promoting transparency and accountability.
While investment banks in Kenya are required to publish their results, Bancassurance subsidiaries often operate without similar reporting obligations.
Requiring bancassurance subsidiaries to disclose their financial results will enhance transparency, foster accountability, and empower consumers to make informed decisions. Aligning reporting practices across different financial intermediaries promotes market integrity and ensures a level playing field.
Despite the evident benefits, the implementation of such data in Kenya faces several challenges. These include data collection complexities, privacy concerns, and the need for robust technological infrastructure. The establishment of centralized Bancassurance data holds immense potential for advancing the growth and sustainability of the sector in Kenya.
By prioritising transparency, accountability, and regulatory oversight, stakeholders can unlock new opportunities for innovation, market expansion, and consumer protection within the Bancassurance landscape.
