The attractive side of insurance

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BY VICTOR ADAR

You know how much pain those who do actual selling of complex investment options like insurance can stand. As always the case, converting prospects into customers is usually no easy task. That’s perhaps the reason as to why more and more sales representatives seem to hide critical details just to close some deals.

But while it seems those whose hands have been burnt in the market simply for lack of knowledge still find wary of investing in the industry, one P.V Saseendran, was prompted to out think. Reporting at Kenindia Assurance from Life Insurance Corporation of India nearly three years ago, the Life and Pension business’ general manager has a lot of confidence that the future is still bright.

Quite a lot in life and pensions department he has achieved that he says if you want to succeed in not only mitigating risks but also benefit from the investment risk taken, discard the negative notion about insurance and start making investment choices based on future financial requirements and risk philosophy.

As an experienced manager whose focus is only on sectors where they stand a better chance of winning, Saseendran says that it is better to take up insurance with proper planning and for the right reasons. Whether it is for education, medical or pension, a policy will make all the difference when something unexpected happens.

“Right now we have savvy customers coming in and taking covers,” he says. “We are doing very well on pension, investment and annuity segments. Our products cater to all segments of the society.”

The performance of life and pension has indeed been remarkable if the total premium income of Sh 4.50 billion for 2017 is anything to go by. Actually, Kenindia’s life fund up to 2016 was Sh 26.298 billion as total investments income for the same year hit Sh 2.807 billion.

Although insurance sector is most likely one of the most enduring business in Kenya with only 2.7% penetration, there is assumption that the industry is still work in progress. But Mr Saseendran is optimistic that the slow down in terms of uptake will soon change and the figures will be growing.

He says: “We have been consistent in the market with the average returns on the pension fund for the past ten years being the highest in the market. We had been rated number one pension provider in terms of guaranteed funds in 2015 on the basis of a survey on the returns on the guaranteed funds for the past ten years and the consistency of returns by the financial services firm, then Alexander Forbes. In 2017, considering our overall performance, Kenindia has been awarded as the ‘Best Issuer’ by the Institute of Pension Management. They have also recognized Kenindia as a fund manager. Pension is our major portfolio and Kenindia enjoys over 9% of the pension market pie as per Insurance Regulatory Authority reports.”

Starting off his career in 1999 as an administrative officer where his work was more of customer relationship management, he would climb the ladder to become a branch manager, a marketing manager heading operations of a division consisting of 14 branches and 14 satellite offices, and is currently a general manager, life business at Kenindia.

As competition gets stiffer in the general and life insurance front, targeting private companies, government agencies as well as individuals is paying off. They also provide guaranteed schemes instead of segregated segments to cushion the members from the risks of capital loss. Segregated funds offer no guarantee on the returns – it can either be a positive return or a negative return depending on the performance of the market.

At Kenindia, Mr Saseendran says, customers are offered a “a guaranteed minimum” – popular as guaranteed returns, an indication that should they make a loss, the bare minimum is still guaranteed. That’s why most players now operate only the guaranteed segments thanks to a stock market that is ever fluctuating.

He explains: “Kenyan market has not been stable in terms of returns, and so risking retirees money is something we have never thought of. You can risk then sometimes you end up losing the principal too.”

According to the Association of Kenya Insurers, insurance firms are the founders of individual pension plans and the appointed corporate trustees are expected to run the schemes as a trust on behalf of members. These schemes are registered by the Retirement Benefits Authority and Kenya Revenue Authority and enjoys similar benefits as that of the staff retirement benefit schemes.

At the same time, statistics indicate that population aged 50 and above is about 10% of the total population and the dependency ratio is over 75%.

It is on the back of this that Saseendran argues that pension investment is a hot market and business is clicking. Last year, the firm grew by 20% on overall with pension segment posting an impressive 26% growth.

With ever emerging risks, the New Delhi University graduate who cut his teeth as a mathematician in the late1980s ushers in 2018 with cheers and strong growth. That he sits on the driving seat of a company that enjoys the backing of the (Indian) government, the future is bright. Wholly Government owned insurance companies of India have 56% share holding in Kenindia Assurance Company at the moment. “Our advantage is flexibility and stability. For example,” he says, adding that investment opportunities offered by Kenindia include Bima Account and Capital Advantage.

The company’s single premium product, Capital Advantage, provides an ideal opportunity for investment for the benefit of children. Bima Account on the other hand is a customised investment product with top up facility and a partial withdrawal facility after two years. The past returns on these products have been very impressive – they offer compounding annual returns and tax free maturity.

While their products are innovative, the forward-looking man encourages Kenyans to take up insurance covers so that they are not shaken to the core especially when the unexpected happens. Contribution depends on how much one can regularly afford.  For the employed lot for example, he suggests that one should do it on a monthly basis. For the business category, one can choose to give contributions annually or depending on flexibility. And there is room for people to top up.

“We can’t say that business is smooth but it is competitive. We are doing very well. Customers are very happy. People are really getting the advantage. Their money is growing. The longer the money stays with us the better the growth. The interest earned after few years is more than the contribution. Imagine if you are growing at an average rate of 11%, the effect of compounding will see your fund grow exponentially in the next few years,” says Saseendran.