Ecobank’s bancassurance arm grows rapidly in Africa

The selling of life assurance and other insurance products and services by banking institutions is a sector in rapid expansion, and Ecobank has emerged as a leader in the field. Tom Collins examines the advantages it provides for customers

The insurance landscape in Africa is changing. Although brokers and agents remain the most prominent channels of distribution, banks have slowly emerged as intermediaries for a wide range of insurance policies. Partnerships between insurance companies and banks have flourished as both sides see mutual benefit in closer collaboration. According to a report from McKinsey, the bancassurance share of premiums in Ghana’s life-insurance market has almost doubled from 7% in 2015 to 13% in 2019. This increase is shared across many markets in Africa.

Out of the 100 banks surveyed across 10 African countries in a report by Finaccord, 89 already sold insurance in one form or another and 41 promoted stand-alone policies. However, the report also found that there were wide differences in bancassurance operating models between countries – largely for regulatory reasons.

Offering insurance services since 2014, Ecobank has emerged as a pioneer and leader in bancassurance services across the continent.

Ecobank, one of the largest banks in Africa, initially started rolling out bancassurance services in 14 key markets. It partnered with some of Africa’s biggest insurance companies including Old Mutual, Allianz, Sunu, Nsia and Sanlam. The initial focus was consumer banking, offering life and non-life cover.

Stella Bagnah-Gamon, Ecobank Group Head of Bancassurance, says that in 2015 Ecobank recorded $1.7m in bancassurance commission. “We have had an upward trend in terms of performance and commission, and in 2021 we ended the year with $4.1m in commission,” she adds.

Above: Ecobank Staff with customers at one of its West African branches.

Around 65% of Ecobank’s bancassurance operations come from the West African Economic and Monetary Union (WAEMU) region: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

The next largest region is Anglophone West Africa (AWA) contributing to 18% of Bancassurance operations with a country like Ghana. Then comes Central East and Southern Africa (CESA), contributing to 16% of the bancassurance operations with countries like Cameroon, Congo Brazzaville, Kenya and Tanzania.

Nigeria brings up the rear with a 1% contribution.

One-stop-shop

The benefits for customers who take out insurance policies with banks is that they can access a variety of financial services in one place, at a one-stop-shop. Banks will be able to offer insurance cover on top of other products like loans, savings instruments and mortgages. The premiums associated with bancassurance products are also typically lower than those offered by brokers, agents or insurance companies.

Chrispen Chinhoyi from ACL Holdings, a logistics company that transports fuel throughout the Southern African Development Community (SADC), says that the Zimbabwebased firm has taken out a goods in transit policy with Ecobank.

“Most of our clients would want to insure their products. We only transport goods that we do not own. In the event that the truck is involved in an accident and the goods are damaged, they will want to recover that from us,” he says.

Chinhoyi says that ACL Holdings recently made a claim with Ecobank after two of its trucks were involved in an accident and some of the fuel spilled onto the road. He adds that the process of making a claim was “extremely easy”, saying that “in any discipline I never doubt Ecobank”.

ACL Holdings moved to insurance with Ecobank after initially using the pan-African bank for basic banking services. After taking out a goods and services policy, Chinhoyi says that the company is looking to move all of its insurance needs over to Ecobank.

“We also want to insure our trucks because those are the assets we use every day,” he says. “For those trucks we want an assessment from the insurer that we can insure comprehensively and also third party because it doesn’t make sense that we put it all on comprehensive.”

As it was already banked with Ecobank, ACL Holdings was also given a discount on its goods and transit policies – a key reason why it took out the policy.

“The reason why we went with Ecobank was because of their pricing. They took into account the fact that we are also

banking with them. It’s much better than what we can get on the market.”

The insurance sector in Africa has traditionally lagged well behind other regions. Africa has one of the lowest insurance penetration rates in the world at less than 3% compared to a global average of 7.23%.

Companies have struggled to create innovative products that meet the unique needs of African markets and citizens. Most of the insurance companies focus on the low-hanging fruit – assets such as motorbikes and health insurance.

Bakar Ndiaye from Safar Glace, a Senegalese company that manufactures ice for fisherman, says that it is hard to find suitable insurance options on the local market: “The principal problem is that most insurance companies demand huge guarantees, which is not good for many companies.”

Ndiaye says that Ecobank did not ask for such a large guarantee and the bank also helped Safar Glace with a partial loan to buy machinery from Italy. The loan has helped Safar Glace ramp up its production of ice, with plans to expand operations into other countries in West Africa.

The businessman also says that banking with Ecobank was an experience that offered the company more than just financial assistance: “They helped us and advised us on how to expand the business. We will try to double out capacity and Ecobank will help us do that.”

Felix Ezeanochie, managing director of Adireje West Africa, also praised Ecobank for offering insurance solutions to his company. He took out a policy with Ecobank to insure the gas which he distributes across Nigeria as a representative of Gazprom, the Russian gas company.

Like ACL Holdings, Adireje West Africa has a goods in transit policy. The company has made three claims since he took out the policy in 2018 after some of his goods were damaged on the road.

“Everything went well,” he says, describing the process of making a claim. “The money went into my bank account on the same day. Compared to other companies, Ecobank’s insurance services are easy to use and straightforward”..

Next growth stage

Ecobank’s Group Head of Bancassurance, Stella Bagnah-Gamon, says that the next stage of growth for the bank’s insurance arm will be digital.

“We want to achieve scale through our digital platform. Our platform will give people the opportunity to buy insurance remotely. This is what we are doing differently from our key partners, we are leveraging on our digital platform”. ■

ACL Holdings recently made a claim with Ecobank after two of its trucks were involved in an accident. The process of making a claim was “extremely easy” they say