2. INTRODUCING TAKAFUL IN NON - TAKAFUL MARKETS: THE CIC KENYA EXPERIENCE Presenter: Steve Muia Business Development Manager The Co-operative Insurance Company of Kenya Limited (CIC Insurance) Kenya, East Africa Email: muia@cic.co.kemuia@cic.co.ke Website: www.cic.co.kewww.cic.co.ke

3. Summary of Presentation About Kenya Demographics Overview of Insurance Industry in Kenya CIC Kenya Takaful Challenges Opportunities Conclusion

4. About Kenya Location: Eastern Africa, bordering the Indian Ocean, between Somalia and Tanzania Area: Total: 582,650 sq km Land: 569,250 sq km Water: 13,400 sq km Coastline: 536 km

5. Demographics Population: 39,002,772 Age structure: 0-14 years: 42.3% 15-64 years: 55.1% 65 years and over: 2.6% Median age: total: 18.7 years male: 18.6 years female: 18.8 years (2008 est.)

6. Demographics Population Growth Rate: 2.691% (2009 est.) Birth rate: 37.89 births/1,000 population (2008 est.) Death rate: 10.3 deaths/1,000 population (2008 est.) Sex ratio: Under 15 years: 1.01 male(s)/female 15-64 years: 1.01 male(s)/female 65 years and over: 0.84 male(s)/female

7. Religions Protestant 45% (17.6 m) Roman Catholic 33% (12.9m) Muslim 10% (3.9m) Indigenous beliefs 10% (3.9m) Other 2% (780,000) Note: A large majority of Kenyans are Christian, but estimates for the percentage of the population that adheres to Islam or indigenous beliefs vary widely

8. Economy The regional hub for trade and finance in East Africa GDP grew an estimated 2.1% in 2008 – projection 7%

9. Overview of Insurance Industry Players: 43 companies (2008) Gross industry premium Kshs. 48.1 billion (2007) Assets Kshs. 130 billion (2007)

10. Insurance Companies in Kenya

11. Regulatory Framework In Kenya, the insurance industry is governed by the Insurance Act Cap 487, regulated and supervised by the CEO of the Insurance Regulatory Authority (IRA). The mandate of the Authority is to ;  Regulate, supervise and develop the insurance industry in Kenya.  Administer the Insurance Act and advise the government on policy matters insurance.  Protect the interests of policyholders. The policy and regulatory framework has no provisions pertaining to Islamic Insurance. Act is neutral

12. CIC Kenya Established in 1978 Staffing - 151 Branches - 14 Asset base - Kshs. 3 billion Gross premium: Kshs. 2.4 billion CIC is the 6 th largest insurance company in Kenya

13. Takaful

14. Idea Conception Idea mooted in 2004. Little/No progress made Picked up in 2005 with formation of a technical team from CIC Kenya and a consultant Concept development Networking Documents Model Systems Staffing

15. Key Issues Understanding the concept Gauging regulator’s reaction Model development Islamic Leaders – Supreme Council of Kenya Muslims (SUPKEM) and COI Research on viability – target areas with large pop of Muslims – fear of leakage to competitors/cost/ Takaful Advisory Board Operational guidelines – underwriting, finance, investment Retakaful Marketing Plan/Strategy/Distribution Policy documentation Systems – IT and operational

16. Model

17. Challenges Lack of regulatory framework Shariah compliance CIC Board Capital requirements Window or fully fledged takaful company New concept – profit sharing, etc Language/Terms Religious and cultural – polarization (Islam phobia) Technology

18. Challenges Operational issues – investment vehicles Staff training Board/Advisory panel Accounting model Acceptance Retakaful Which model? Rating Anticipated competition

19. Opportunities New concept Large population that is not insured Alternative – Kenyans always ask why insurers never refund premium Islamic banking Regional expansion – EAC, Somalia, Ethiopia, Djibouti

20. Country Figures (2009 est) - Opportunities Country/Year2009 Population (in Millions) Kenya39.002 Tanzania43.739 Uganda32.710 Rwanda9.998 Burundi8.303 Ethiopia82.545 Djibouti0.502 Somalia8.863

21. Current Status CIC is partnering with local investors to set up a Takaful insurance company. Partnering with local investors to purchase 30% stake in a newly registered venture - Takaful Insurance of Africa

22. Conclusion CIC is optimistic that the Takaful concept will pick well in the market and that our partnership with Takaful Insurance of Africa will bear fruit to the co- operative movement. We shall bank on the international co-operative community to give us the necessary support in rolling out Takaful in Kenya. Thank you and may God bless you