OESAI : LIFE INSURANCE TECHNICAL TRAINING 12-13 OCT 2016 – TRAVEL LODGE, GABORONE BOTSWANA Presented by Ezekiel Macharia, Chief Actuary (KAFS)

Life Underwriting Trends & Opportunities OESAI COMPREHENSIVE LIFE INSURANCE TECHNICAL TRAINING Ezekiel Macharia Chief Actuary – Kenbright Actuarial & Financial Services Day 2, Thursday 13th October, 2016

Why Life Insurance? Long Term Investment 6.5 times lower on GDP per capita Why Life Insurance? Long Term Investment

AGENDA Africa & the World Opportunities Trends Conclusion

Insurance in Africa $2,200 $13,000 $640 $61 4.9% 2.7% Africa World Real GDP per Capita $2,200 $13,000 Premium per capita $61 $640 Africa World Willingness to Pay 2.7% 4.9%

Life vs Non-Life

Insurance vs GDP

Risk Based Supervision: Transition in 2015 Botswana Kenya Mauritius Morocco Mozambique Nigeria Sierra Leone Tanzania Zambia Zimbabwe

Products in Scope Term Assurance Endowment & Whole Life Group & Credit Life Annuity (fixed & variable) Unit Linked Disability (Temporary & Permanent) Major Diseases (Critical Illness)

Product Attraction by Age Unit Linked Term Assurance Investment Focused Whole Life Endowment Group Life Disability Protection Focused Annuity Long Term Care Savings Focused

Opportunities: Average Age

Income by Age GDP Per capita USA: $53,000 Africa: $2,200 People below 25 yrs earn significantly less even in the USA – Median Age in SSA is 17 GDP Per capita USA: $53,000 Africa: $2,200 Botswana: $7,500

Opportunities: Average Age

Changing Age Profile Botswana: 1950 Botswana: Today Botswana: 2050 Source: United Nations, Department of Economic and Social Affairs Botswana: 1950 Botswana: Today Botswana: 2050 The population profile is expected to grow older, be wealthier (rising middle class) and seek protection through insurance

Key Trends Sales Others Fraud Automation Micro-life Fraud detection tools Automation Online sales Micro-life Linked with Telecos Predictive Underwriting Rating Cross-Selling Product Bundling Mobile Money Quick claims settlement Price Optimization Different prices for different channels New Products Long term care

Key Considerations Longevity Risk – people living longer than expected Reinvestment risk – negative interest rates in future Contagion – Global financial crisis Risk Based Supervision Passing risk to consumer Unit linked products Variable annuity products Competition from banks – embedded banc-assurance that sell savings & protection

Key Considerations Use of Technology in Distribution & Claims New Distribution Channels Use of mobile money in Africa for claim settlement Increased Reinsurance support Using Big Data New Generation – New Solutions

Conclusion There is scope for growth in life insurance Life Insurance can improve the economy through long term investments The African population is young and can take up insurance given the right incentives Trends in automation are prevalent Key considerations include longevity risk, reinvestment risk and risk based supervision

? QUESTIONS ezekiel@kenbright.co.ke +254 722 540 045

Actuarial & Financial Services Kenbright – established in 1993