Business Daily/All Africa Global Media via COMTEX —

British American Insurance has launched a new personal accident insurance product whose premiums will be paid through the recently launched M-Kesho Account.

The new product, to cost Sh530 per year or staggered monthly payments of Sh69.17 or weekly payments of about Sh20, is a micro-insurance product that is likely to increase the pace of innovation in the insurance industry, which is struggling to increase penetration.

The company’s personal insurance business is the fourth largest in Kenya (Sh475 million), behind APA Insurance at Sh1.9 billion, UAP Insurance at Sh714.7 million and CFC Life at Sh631.2 million, based on 2008 financial statistics.

Some insurance industry players who requested anonymity, for fear of being perceived as undermining the new product, said they were worried that it could pull in a significant number of their personal accident business and make major gains in the search for new clients, starving other insurers of new policy sales.

British American Insurance (Britak), however, downplayed the concerns.

“This is a product that could drive innovation in the industry. Every insurance company is looking at what areas it can have a head start in,” said Stephen Wandera, the managing director of Britak

The product’s features like low premium, low monthly payments, application and premium payment over the mobile phone combines most of the qualities that have been identified as critical in the success of micro-insurance product of its nature.

A study commissioned by the Association of Kenya Insurers (AKI) in 2008 identified the need for low cost insurance products as a major possible driver of insurance services’ growth in Kenya.

As a result, several insurance companies have come up with low cost insurance products that have had mixed performance in the economy.

Kenya Orient Insurance Company launched a 24-hour personal accident cover in 2008 that costs Sh30 and is traded over the mobile phone.

It is not clear how that product has performed in the market.

Others like CIC Insurance, the pioneering micro insurance company in Kenya said its array of micro insurance products contributed Sh400 million to its overall Sh2.8 billion gross premiums.

Others who have made gains from micro insurance precuts include UAP Insurance and Mercantile Insurance companies.

Insurance penetration in Kenya is dismal, with general insurance averaging 1.7 per cent according to the AKI data of 2008 while combined general and life insurance have penetration of 2.63 per cent.

The new product will have a death benefit of Sh150,000, a similar financial benefit for permanent disability, Sh30,000 for medical cover and Sh20,000 for the last expense – to take care of funeral expenses.

“M-Kesho is a major win for micro insurance because it makes it easy to reach the bottom end of the market,” said Steve Mainda, the chairman of the Insurance Regulatory Authority.

The new product could set Britak as one of the major players in the personal accident business if the product is well marketed.

Already, the product enjoys the opportunity in numbers because of the nine million M-PESA subscribers, as some could buy the product.

It will also gain from the 17,000 M-Pesa agents who could be empowered to market the product.