Our client on this assignment was a leading general insurance company in Kenya.
The biggest proportion of Kenya's insurance business is controlled by intermediaries, who include large brokers, mid-sized insurance agencies and freelance independent agents. Less than 30% of the total insurance business is transacted directly without the involvement of an agent or other intermediary.
Supply chain relationships in Africa’s insurance industry in general bring to mind what the travel and tourism business was several years ago, when travel agents and tour operators controlled over 90% of flight or hotel bookings. This has since changed and today airlines and hotels are engaging with end consumers directly through a variety of channels. The structure, functions and operations of travel agents and tour operators has also changed, which has created new opportunities as well as pushed other businesses to close.
The local insurance industry has yet to get there, and this assignment sought to understand the relationship between intermediaries and the insurance companies – what intermediaries valued most, what determined where they placed business, and how competing insurance companies in the Kenyan market were responding to each situation.
This assignment was part of a bigger assignment in which we were reviewing the client's overall business strategy. In so doing, the client was keen to determine the optimum mix between commercial lines and retail business, as well as the projected performance of direct and intermediary business across both commercial lines and retail business. Given the implications of this mix, particularly with respect to acquisition costs, it was important for the client that the decision on what business mix to plan on be as accurate as possible, realistic and impactful.
We developed appropriate sampling tools as the basis of our engagement with representative samples of intermediary and direct business segments in Kenya’s insurance industry, aiming to obtain a 95% confidence level and a margin of error not exceeding 5% in each population samples.
Our interactive engagement with the identified sample respondents was guided by comprehensive benchmarking tools which we used to determine performance expectations within each population sample, and the extent to which these expectations were being met by different insurance companies in the local market.
The client obtained invaluable insights into the extent they were meeting both intermediary and direct customer requirements; and on the basis of this, went ahead to develop appropriate strategic responses, which included changes in communication and engagement channels, changes in internal decision-making procedures, changes in organization of personal lines insurance sales, changes in their agency management model and changes in the business' market segmentation and product development plans.
Having implemented these changes, the client moved up three places in market share and in the third year post-implementation was the leading insurance company nine out of eleven categories in the annual insurance industry awards.