Kenya-based Resolution Insurance Company Ltd, formerly Resolution Health East Africa, will spend Ksh500 million ($6 million) on its expansion project in the East African region in the next one year.
The company last week said it had received approval from Kenya’s Insurance Regulatory Authority (IRA) to become a fully-fledged underwriter and operate as a general insurance company with bias towards medical insurance and employee benefit products, hence the change in name.
The move follows a December 2012 directive by IRA that all medical insurance providers (MIPs) operate either as brokers or general insurance companies in order to safeguard policy obligations.
Among requirements IRA sought are adequate liquid paid-up share capital and identification of company shareholders as well as board members.
Resolution Insurance Company Ltd now joins AAR insurance in fulfilling the conditions.
The change means the company can now retain risks, tender for insurance business, invest in real estate and other ventures, as well as diversify to general insurance products.
Resolution Insurance said it will use its strength in medical cover to grow its business in the regional market.
“There is a growing demand for medical insurance services across East Africa, driven partly by the rising cost of health care that is forcing people to opt for a predictable healthcare financing option,” said Peter Nduati, the chief executive at Resolution Insurance.
The expansion plans include acquisitions in Kenya, Uganda and South Sudan.
Demand for medical insurance services in East Africa is partly being driven by changing demographics of diseases such as cancer that is fast replacing heart disease and HIV/Aids as the biggest killer. Cancer is an expensive disease to manage and families are forced to fund raise and sell their assets to treat it.
“People across the region are afraid of the costs of treating cancer and other increasingly common diseases. A few years ago, it was extremely hard to get a customer calling to buy a medical cover; today such calls are regular,” said Mr Nduati.
Resolution Insurance has operations in Tanzania and Uganda, and plans an acquisition in South Sudan, a virgin market that has become a target for Kenya insurers.
Key regional players include Jubilee Insurance, UAP, APA and Britam Insurance.
The entry of a specialised medical insurer into the region is expected to trigger competition in medical cover resulting in better priced and diversified products.
Resolution Insurance’s gross written premiums in 2012 increased by 31 per cent from Ksh1.583 billion ($17.6 million) in 2011 to Ksh2.071 billion (23.5 million).
The expansion of insurers within EAC could, however, be less costly when recommendations made by the East African Insurance Supervisors Association (EAISA) are implemented.
The association recommended harmonisation of insurance laws such that a Ugandan insurance company wanting to expand to Kenya can open a branch rather than be forced to set up a new company meeting the minimum capital requirements.