GROWING REVENUE
Co-operative societies have positioned themselves as formidable institutions transforming communities through the provision of reliable financial solutions. With the Covid-19 pandemic hitting Savings and Credit Co-operative Societies (Saccos) members hard, the institutions need to intentionally respond to member’s needs through tailor-made financial products and services.
This calls for Sacco managers to seek new avenues that will enable them to diversify products and services they offer to maximize members’ benefits and generate more revenue. Bancassurance, commonly known as Sacco Assurance in the co-operative movement, presents numerous opportunities for Saccos.
What is Bancassurance (Sacco Assurance)?
To diversify the products they offer, Sacco’s are now seeking alternative channels such as Bancassurance (Sacco Assurance) to grow non-funded income streams. Bancassurance is the partnership between insurance companies and financial institutions where these institutions act as corporate agents to sell insurance products and earn a commission in the process.
According to the Insurance Regulatory Authority (IRA) 2020 report, financial institutions registered intermediaries have contributed immensely to the total industry premium collection, Saccos included.
 Today insurance companies have departments dedicated fully to service Sacco Assurance intermediaries. The synergy provided by the two organized institutions with qualified professionals leads to better service delivery and customized products to clients. The approach has contributed to the increase of insurance penetration from the paltry 3%.
OpportunitiesÂ
The culture in co-operatives is that of togetherness for self-empowerment. Sacco’s have distinguished themselves in banking individuals in almost all cadres of the society, going down to serve the local Mwanaichi. Research shows that the primary reason for the low insurance penetration is the lack of well-researched insurance products; many of the products sold today are off the shelf.
The Sacco model is customer-centric. It provides a proper mindset of the right products for the right customers, not the opposite. Insurance companies will develop products from feedback, and consumer trends gathered from the field.
Saccos have the opportunity to sell various products to members: credit, group and individual life assurance, funeral cover, medical policy, property insurance, crop insurance, livestock Insurance, pension umbrella policies, motor Insurance, endowment policies, etc. Saccos will derive additional income streams from such a strategic partnership while insurance companies benefit from lower distribution costs.
Start Sacco Assurance
Different insurance companies have different partnership models for Bancassurance and Sacco assurance. Strategic Model and Distribution partnership model are the most common. In a Strategic partnership, financial institutions sell products for one insurance company, while in the distribution partnership model, the insurance company sells products for several insurance companies.
In addition to engaging strategic partners with the right model, Saccos must invest in the following critical success factors to guarantee continuous success: qualified personnel, tailor-made products/innovation, standardized processes, continuous training, customer service, and leverage on technology.
The regulatory framework governing Sacco Assurance
Bancassurance operations are guided by the provision of the Insurance Act Cap 487. The Act stipulates what an entity should and not do. It also defines consumer rights, such as exercising their discretion in the choice of insurance companies to engage.
IRA is a statutory government agency mandated to ensure that insurance activity is conducted as per the provisions of the Insurance Act. The Authority issues operating licenses to Bancassurance or Sacco Assurance intermediaries and other agencies annually.
Sacco Societies Regulatory Authorities (SASRA), the semi-autonomous government agency that licenses and supervises deposit and non-deposit taking Saccos, evaluates the business case, and issues an approval (letter of no objection) before IRA issues an operating license.
Periodical reports will be required by both IRA and SASRA on the units’ performance, and this will form a basis for future license renewals.
A number of Saccos have embraced Sacco Assurance and are growing shareholders’ wealth exponentially while offering a one-stop shop for various financial solutions. This is a natural business progression that other Saccos in the country should also embrace.
Should you require a consultant to assist you set up or re-strategize Sacco assurance units, Creative Models Consultancy Ltd offers you various services to navigate this path with ease. Contact us on 0724405928 or 0724856760 email: [email protected], www.creativemodelsconsultancy.com.
