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Bancassurance in Kenya: How law controls business

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The company had grown so fast with revenues running in to millions of shillings. The mother company was taking note and closely monitoring the progress.

The market was accepting us and we were a go-to broker in case one had an insurance challenge. The first team of employees working at the company had done a tremendous job in creating a culture in which everyone at the branch wanted to be associated with. Things only looked brighter and we could not wait for the next year.

Incentives were growing and every insurance firm wanted to strike a deal with us. Every insurance manager across the country wanted to associate with our company. Companies started hiring resources just to make sure that we were fully comfortable.

One of the agents stood in one of our regular meetings to share how delighted she is that she found the best job in the world. She said “I will never stop selling insurance come sunshine, come rain. This is the best job in the world.” At one point in the meeting, one of the coordinators of an insurance firm told the team monthly commissions had been sent except for our colleague whose M-pesa was full and money was bouncing back to the sender.

On the onset of 2016 targets were taken a notch higher, new staff were hired and the head office team had to spilt into two. They couldn’t fill the original office because there was more work now. Number of accountants doubled from 3 to 6 and an intern was brought in just to make sure that foot soldiers had enough support.

Field teams, in which I am a member, had to be divided in to regions for easy monitoring and accountability. There was only the sales team leader to handle the entire team which was now scattered across the country. There was a need, the country sales team leader wanted help in managing the field teams. It was obvious that some of the members in the field were to be promoted to manage others.

Everyone waited anxiously for the vacant positions to be advertised. There were rumors that the best performers of 2015 were going to be given a node. At the branches everyone so Bancassurance as a star department and they would always refer business to us. It was easier for them to sell insurance now.

Other insurance agents started wondering on the sudden rise of Banc assurance in Kenya. Business was escaping their hands and banks now were enjoying bigger chunk of the profits. Things became worse and agents had to report this to the regulator. Under consumer protection Act, the client is not supposed to be forced to take insurance with a particular agent, it is supposed to be solely the choice of the client.

Then a memo from insurance regulatory authority comes in. All banks are asked to adhere to consumer protection act. No bank will be allowed to force clients to buy insurance with particular agents by means of inserting a clause in the loan deals. Things changed. The ride became tougher and only the tougher would survive. The clause was struck off and now clients were free.

All the perceived success was hidden behind a clause in the loan approval memo which required clients to buy insurance through our department. Then it turns out that much of the success we had boasting of was as a result of a clause in the approval memo.

Then things started slowing down. The market started changing, two banks were placed under receivership on matter unrelated to this events. Market perceived banks differently and it was not easy to gain back the glory. At the end of the first quarter we had achieved less than what was expected. Slightly above 50% off the target. The only remedy to cover up the deficit was to get the team to get out and bring in the clients. The fight for business became real and now we are like those agents outside there with briefcases wooing customers to buy insurance with us.