AFRICA-BUSINESS-Africa's strained social networks open

doors for life insurers | Reuters

* In Africa, communities act like insurance policies
* As social ties fray, life insurance gains customers
* Kenya, Ghana attract insurers, markets still modest
* Paying for funerals still main focus of policies
By Katharine Houreld
NAIROBI, Oct 31 Families gather at Nairobi's
Garden Square restaurant each evening seeking donations from
friends and relatives to meet spiralling medical, school and
funeral costs.
These "harambees", Swahili for "let's pull together", are
for many Kenyans the equivalent of an insurance policy, as just
1 percent of the population have life cover.

But such traditional community ties are fraying amid the

urban bustle and some are now wishing they had a
secured an
insurance payout, rather than relying on the goodwill of
others.
"We have been here two weeks trying to raise money,"
said
Ezra Rahedi, 30, slowly sipping on a soda as he added up the
costs of old medical bills and a funeral for a relative. "If we
had insurance, we could have had (the funeral) already."
Changing attitudes and rising disposable incomes in many
parts of Africa, from Kenya in the east to Ghana in the west,

are creating new opportunities for life insurance firms.

But outside well-developed economies like South Africa, life
insurance firms have to start with the basics, explaining what
they do and how they can help in times of need.
"In our African culture, a problem is communal. (But) this
culture is dying," said Elijah Wachira, managing director of
CIC, one of 51 insurance firms in Kenya, of which 26 offer life
cover.
"We go to the bottom of the pyramid and tell them, 'this is
a more formal way'," he said.
For companies like Jubilee and Britam,
two of the biggest life insurers in Kenya, it means sending
sales people to canvass the families gathered around the flimsy
white plastic tables in the concrete yard of the Garden Square
- the heart of the "harambee" culture.
The restaurant's owner, Patrick Barasa, said he often sees
agents explaining to diners sharing a chicken and chips how a
policy works.
"You hear of people suffering all the time. The breadwinner
disappears, the children suffer. Friends come for a short time,
but there's no follow-up," said Barasa, who took out a policy
for himself after seeing others struggle.
FUNDING FUNERALS
Much of the life business in Africa is still associated with
meeting funeral costs, which in many societies can be lavish,
celebrating the life of the deceased with big gatherings.

But Owusu Yaw Osei-Bobie, operations manager at Ghana Union

Assurance (GUA) Life Company Ltd, said he wanted to encourage
people to see life cover as offering many more benefits.
"We needed to address the myth and convince the people that
life insurance is not only about death, so we designed special
micro saving schemes and linked them to our life products," he
said, adding schemes for those in casual employment had drawn
about 1,500 clients.
Some insurance firms have linked up with Saccos, Kenya's
network of savings and loan cooperatives, which offer savers
steady returns and allow members to borrow in hard times.
CIC teamed up with Maisha Bora Sacco, a small cooperative
whose offices are tucked between factories in Nairobi's
industrial area, to introduce a mandatory life insurance scheme
for all of its 3,500 members.
For a 100 shilling monthly premium, it pays 25,000 shillings
for funeral expenses, helping meet a major part of what can
sometimes take many days or weeks to raise via "harambees".
"Many people opposed this scheme when it was first
introduced, but now they are asking for the premiums to be
increased so they can receive more when it is their turn," said
Simon Arunga, a board member of Maisha Bora Sacco.
When his mother died in October, the payout helped meet a
chunk of those funeral costs.
"When you are assured of something, immediately it eases
your mind," he said.

INTERNATIONAL INTEREST
Life insurance has grown in Kenya, but just 1 percent of the
nation's 46 million people are covered. Premiums doubled to 62
billion shillings in 2015 from 31 billion shillings in 2011,
Association of Kenya Insurers figures show.
Its potential has drawn international firms like Britain's
Prudential, which entered in 2014, but regional players
like Nairobi-based Britam, with a 30 percent share of Kenya's
life market, still dominate.
The Kenyan industry recorded a profit of 11.57 billion
shillings before tax in 2015, compared to 15.74 billion
shillings in 2014.
In Ghana, Osei-Bobie said the life insurance market had
grown from the 1.5 percent of the population to 2 percent in
three years but was "still relatively small", adding GUA Life
aimed to educate more people on the benefits.
Tom Gichuhi, Association of Kenya Insurers chief, said
Kenya, like other African nations, had a young population and
many were not paid enough to afford insurance.
But the biggest problem is that many who could afford a
policy have no knowledge about life insurance, he added.
"People will not buy what they don't know about," he said.
($1 = 101.3500 Kenyan shillings)
(Additional reporting by Kwasi Kpodo in Accra and Carolyn Cohn
in London; Editing by Edmund Blair and Alexander Smith)
http://www.reuters.com/article/africa-insurance-idUSL8N1CX53E