Insurance firms in Kenya are rolling out innovative wealth management services to the public, promising higher returns and personal covers as added value, exerting pressure on the country’s banking sector currently facing competition from mobile money services.
A classic example of this trend is exhibited by Britam Asset Managers, a company under Britam Holding that is offering personal and institutional financial services like unit trust funds, discretionary portfolio management, private wealth and diaspora financial services. According to Geraldine Kioko, a financial advisor at Britam Asset Managers, fixed income wealth managed by the firm can earn an investor up to 130 per cent of total assured sum in bonuses, this in addition to the total premiums obtained at the end of the assured period. Investors can also obtain credit facilities against their premiums.
Other benefits include personal health and accident covers as well as waiver on premiums in case of terminal disease or death. The plan also covers funeral expenses for the investor and compensates the family of the deceased.
According to Britam, fixed income wealth management service is aimed at achieving high-income return generated through investments in fixed income securities whilst ensuring risk is minimised.
Started in 2004, the subsidiary is currently managing assets worth over $1 billion (Sh78 billion). Under the Britam’s fixed income wealth management service, an investor can deposit minimum lump sum of Sh1 million with a minimum tenor of three months.
This is a departure from the traditional bank saving where investors were relying on interests amid bank operational deductions. Currently, the average bank interest on savings stands at seven per cent in Kenya.
According to Daniel Kuyoh, a financial investment analyst at Kenya Orient, insurance companies are revolutionising the financial market in Kenya through products that add value to investors.
He said the financial sector in Kenya is changing at an alarming speed, with customers looking for a one-stop shop that provides extra value services.
The competition from insurance sector is a blow to the country’s banking sector which is still suffering from a jab inflicted on it by the launch of mobile money services. The sector is also nursing losses brought about by the banking Act 2016 that capped interests at four per cent above the Central Bank Rate (CBR)
Even so, the Kenya Bankers Association chief Habil Olaka believes that the financial market in the country is broad enough to be shared by the available financial institutions.