Co-operatives Commissioner, Mary Mungai awards a member of Police Sacco for patronising the society during their recent Annual Delegates Meeting. Looking on is the Sacco Board Chairman, David Mategwa. Photo/Daniel Ogendo.

Saccos eye Insurance Agency billions

By Jackson Okoth.

The list of Deposit-Taking Savings and Credit Co-operative Societies (Saccos) that are planning or have already set up their own insurance agency business is getting longer by the day.
On their sights are millions of shillings in premiums paid out to insurance companies by clients keen to have covers against various risks.
The latest entry is Stima Sacco Society Limited whose members recently approved plans to establish Stima Insurance Agency that will be fully owned by the Society and its affairs managed through a separate Holding Company.
“According to our strategic plan, we intend to earn more income by setting up our own insurance agency. At the moment, we spend a lot on paying for insurance-money that we can utilise to do other things if we have an agency of our own. This is one of the low-lying fruits that can increase the Sacco’s income and return to members,” said Chris Useki, Acting Chief Executive Officer-Stima Sacco Society Limited.
He made the remarks during the Society’s 43rd Annual Delegates Meeting (ADM) held at the Kenya Institute of Curriculum Development (KICD) in Nairobi. The Board of Stima Sacco Society Limited is expected to capture the issue of this holding company in its policies. It will also formulate clear guidelines and structures needed to establish this insurance agency.
“The ADM approves the Society to register its own holding company that shall own the insurance agency,” said Beatrice Meso, Honorary Secretary-Stima Sacco Board of Directors.
The trend by DT Saccos to establish their own insurance agencies comes at a time when most of these Societies spend huge sums in payment of premium against various risks.
Big DT Saccos that already have a fully-fledged insurance agency business include Unaitas and Tai Sacco.
“All these insurance agencies are merely brokers and still have to bring the business to a licensed underwriter like us. What these agencies will be doing is to collect premiums on behalf of the insurance companies,” said Japheth Anavila Magomere- OGW- Chairman of the Board of Directors- CIC Group Limited.
He added that CIC has already entered into partnership with numerous insurance agencies and brokers and that the wider the network, the better for both CIC and the intermediaries. “It is a win-win situation for all- Insurance firms use the agencies- who are able to establish direct links with the client. We are able to cut costs by dropping use of numerous brokers and instead appoint more reputable agents who then earn higher commissions in the process,” said Magomere.
These sentiments are shared by Nelson Kuria- a career long insurance executive and now Chairman of the Board of Directors, SMEP Microfinance Bank Limited.
“The motivation behind Saccos establishing their own insurance agencies is so as to find an additional income stream. These Sacco insurance agencies collect premiums on behalf of licensed underwriters and earn a commission like any other agent,” said Kuria.
Unaitas Sacco Society Limited, which has plans to transform into a microfinance bank has one of the most elaborate insurance products which they sell to members of behalf of underwriters.
“The entry on Saccos into the insurance agency business is a win-win situation for both underwriters and the Saccos. Underwriters are able to use Saccos as aggregators- using their access to large data bases of their membership to sell such covers as life insurance, pension, property, motor and livestock insurance,” said Tom Gichui-Chief Executive Officer, Association of Kenya Insurers(AKI).
He added that underwriters are able to increase penetration using Saccos that are more trusted by members. “ This is the same arrangement insurance firms have with banks-through bank assurance- to sell insurance products to bank customers,” said Gichui.

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