Kenbright Advisory; Navigating risk and regulatory complexity

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With its wide scope knowledge of the local financial services, in-depth expertise and understanding of the global financial landscape, Kenbright has introduced an advisory wing to offer unique consultancy to firms in the region

By Okumu Sylvester

Sammy Makove, the current head of Regulatory Affairs and Advisory division at Kenbright Actuarial and Financial Services has become synonymous with the insurance industry.

He is a founder member of Insurance Regulatory Authority (IRA); an independent body outside the controlling arms of the National Treasury to regulate the industry. Mr Makove has been at the helm of the authority since its inception eight years ago; a position he held until his retirement in February 2017.

In an interview with the Edge, Mr Makove shares his rich experience in the industry since 1987 and why he is now better placed to further the development of the insurance and financial sector.

With a notable career in the financial sector, Mr Makove was honoured by the President of Kenya with Moran of Burning Spear (MBS) recognition.

He heads a division that offers unique consultancy service; the first in East and Central Africa due to its focus on Regulatory Advisory with an actuarial and risk component for the financial sector.

“I am arguably the longest serving insurance regulator in the region. After my term expired in the government, I decided to use my rich experience and knowledge of the industry to further develop it as a consultant,” says the executive.

After research, Mr Makove realised a gap and capitalised on it. The industry lacked experienced specialists who can advise the government and private sector on regulatory policies and good practices. “Complex regulations are being rolled out every day,” he says, “that means many regulatory changes are coming, not only in Kenya but Africa as a whole.”

The end result of this is too many requirements for organizations to comply with.

“I have been asked by many countries and organizations like World Bank to share my experiences and knowledge. With my new role at Kenbright, I envision being better placed to achieve that,” says Mr. Makove.

According to Ernest & Young 2016 report on the sector, Kenya has a robust regulatory system compared to its peers in the region.  It is rated second in Africa after South Africa for its elaborate inter-regulatory frameworks.

Focus

With its wide scope knowledge of the local financial services, in-depth expertise and understanding of the global financial landscape, Kenbright introduced the advisory wing to offer unique consultancy to firms in the region.

With customer access as its priority, their office is strategically located within Nairobi city in Upper Hill. Having a resourceful and credible team is key. As such, the inclusion of Holly Bakke, an international advisor, and former insurance commissioner of Banking and Insurance for the US State of New Jersey to the team will buoy the company operations.

Kenbright’s advisory unit area of focus will be:

  • Mergers, Acquisitions & Company Split
  • Entry into New Markets
  • Corporate Governance & Training
  • Strategic Planning
  • Regulatory Policy & Strategy
  • Regulatory Compliance & Liaison

According to Mr Makove, many firms do not have a regulatory strategy; they wait for a regulation to be effected before complying. He argues that the ‘wait and see’ attitude is expensive and might have a negative effect on the overall mandates of the firm.

“A prudent institution ought to know that regulations are constantly changing and becoming more complex. Rather than waiting for the chase, it is prudent to prepare beforehand,” he advises.

Mr. Makove urges companies to stay ahead of time by implementing the necessary regulatory requirements promptly. “From where we stand, we have vantage knowledge of the regulatory affairs, both local and international,” he states.

With such information, they are able to advise clients accordingly and help them implement strategies in good time.

“It is unfortunate that many companies which were solvent last year are now capital inadequate and struggling. The introduction of risk based capital requirement in Kenya changed the ballgame. These companies are now trying to restructure in order to remain in business. We have the technical ability to analyse such complexity and advise accordingly,” adds the executive.

Kenbright also aims to extend these functions and advise African governments on good regulatory laws, financial policies and best practices. It is critical to have policies that are realistic and internationally accepted, he notes.

Corporate governance

Many companies have failed in Kenya due to poor corporate governance says the insurance guru. “During my stint at IRA, we introduced a regulation clause which ensures that directors of all insurance companies are certified, and continuously undergo corporate training,” adding that, “At Kenbright, we train clients on corporate governance to advance sustainability of their firms.”

The impact of technology

“Anybody who ignores technology has no reason to be in businesses. Technology is advancing very fast. It is clear that insurance and financial services cannot operate without tech intervention.”

In his opinion, Kenya leads the world in financial product engineering through tech intervention like M-Pesa and M-Akiba.

The executive calls for the insurance sector to borrow a leaf and see how existing and new markets can be reached through digital platforms.

He questions the challenges of not embracing technology. “Why should an insurance agent board a bus from Nairobi to Kitui to sell a product to a teacher? And how many teachers will he reach? We should adopt new ways of doing things. The current generation is IT savvy and most of the products they interact with are digitised.”

He further advises firms to understand the local market and is characteristics. “There is no need to borrow a product that has been a success somewhere and try to implement it here.  Chances are that it might fail. M-pesa and M-Akiba are products of extensive research that is innovated every day, he asserts.

He acknowledges the impact of data analytics in driving insurance growth. He says, “If we have your data, we can know which kind of product you need.”  Correct data helps analyse clients’ income levels, social life and even expenditure. As such, products can be tailor-made to meet client’s needs. With this information for instance, it becomes easy to define clients expected need. “Based on the age bracket, we can tell that a client has school going kids, as such an education policy would be a best bet, he pinpoints.”

It is such creative marketing that is critical in driving insurance penetration and inclusion.

SMEs

Small and medium enterprises are key drivers of our economy. They employ millions of people and contribute immensely to our GDP. However, they have been perennially excluded by the insurance sector.

“The inferno incident at Gikomba market for instance was unfortunate. The fire damaged properties worth millions of shillings. That shouldn’t happen.  Such mess would have been mitigated by a simple insurance product, concludes” Mr. Makove.

With effective response, the businesses should have been restored to the initial position before the occurrence of the risk.  A market niche Kenbright Advisory is keen about in terms of insurance inclusion of SME’s to aggregate them and sell insurance cover for their businesses.

 

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