Kenya’s biggest telco Safaricom has secured an insurance licence from the Insurance Regulatory Authority (IRA), ending a four-year wait. The company will now offer insurance services to its M-Pesa users with a new product, Bima, its CEO Peter Ndegwa said during Thursday’s H1 2024 earnings call.
The new product aligns with the telco’s strategy to broaden M-Pesa into a financial service provider that responds to its customers’ “digital needs.” The company has been testing insurance products since 2020, awaiting regulatory approval.
“Innovation remains critical. We have revamped our wealth proposition and have now received an insurance intermediary license from the Insurance Regulatory Authority,” Ndegwa said.
“This will help us accelerate our rollout of insurance solutions, we expect to rollout propositions in both wealth and savings but also insurance in the second half of this financial year.”
Safaricom is keen to tap into the over 30 million active users who transact over $11.6 billion (KES1.5 trillion) monthly to grow its unit trust, savings, and insurance products and offset a decline in calls and text revenue. With just 3% insurance penetration in Kenya, Safaricom hopes to ride on M-Pesa’s popularity to get a piece of the insurance market.
The telco’s plans to increase financial services like wealth management and insurance on its M-Pesa platform have run into multiple problems, including a push from the Central Bank of Kenya (CBK) for the company to split its mobile money into a separate unit.
M-Pesa already has a unit trust product, Mali, and savings accounts through partnerships with KCB Group and NCBA. It also has an overdraft product.
In H1 2024, M-Pesa accounted for 43% of the service revenue after posting a 16.6% growth to $560 million (KES77.2 billion), compared to a similar period last year.
Safaricom controls a 93.4% share of Kenya’s mobile money market, leaving Airtel Money with 6.6%, according to the Communications Authority of Kenya.
