Post insurance: a new and promising market for African postal institutions
This article is a summary of a text written by Wilfrid A. Serge MARTIN, Directeur des Services Financiers Postaux at La Poste, our WSBI Member in Benin. It defines what post insurance is and describes the situation and the perspectives of post insurance in Africa and in Benin in particular. The full text of the article, with more statistical information, can be obtained on demand.
The marketing of insurance products via the distribution network of a financial institution leads to new market shares, generates extra revenues and constitutes a welcome diversification of the product offer. Indeed, both non-life (accidents, health, car insurance, travel insurance) and life insurance can be offered to the clients, either directly or linked to a financial product. Banks all over the world, and also in Africa, have taken up this opportunity since a long time already and coined the concept “bank insurance”. Postal institutions in West Africa have on the contrary a lot of catching up to do. Instead of tapping into this new and promising market that corresponds perfectly to the needs of their clients, these institutions have focused far too long on their traditional postal and financial business, although their creation law or regulation anticipated this contingency already in the 60’s.
The so-called CIMA code, which regulates the insurance market in 16 African countries including Benin, enables a change of the law on the insurance sector in 2004. An additional clause obtained after a battle of many years headed by a private insurance company and La Poste du Benin, allowed the marketing of a full range of insurance products (life and non-life) through the post offices and microfinance institutions.
The use of the “post insurance” concept will not only bring in new business, but will also enhance the specific role and identity of the postal institutions against the commercial banks.
La Poste du Benin is putting in place an intensive marketing plan for a retirement related insurance product, after the launch in December 2005 of a new product based on life insurance. Indeed, these product categories have an important potential for savings mobilisation. This is demonstrated by positive experiences of La Poste du Senegal, where sales of retirement savings surged after the introduction of an insurance- linked product. Earlier, la Poste had already introduced successfully an insurance linked to an account.
The results obtained by La Poste in Benin and positive experiences by postal institutions in other African countries clearly show the need for Postal institutions to orientate towards new businesses. The use of the post insurance concept will allow the national post office to capture an important part of the Benin insurance market, where currently 10 insurance companies are active. The potential is undoubtedly present and thanks to its large network, its important client portfolios and considerable sales volume, the Benin Post is ideally positioned.
