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Chief Executive Officer George Ototo says the KUSCCO Mutual Assurance targets middle and lower income earners and Sacco members as it seeks to claim a stake in the country’s insurance sector.

Last year saccos across the country had a combined deficit of 100 billion shillings due to increased borrowing and reduced savings from the members.

To mitigate against losses the government and financial stakeholders have been frequently urging saccos to diversify and add more products in their business portfolio to sustain growth.

The new subsidiary, KUSCCO Mutual Assurance will focus on unveiling life insurance policy that targeting the middle and lower earners.

The Sacco targets to raise 1 billion shillings annually in premiums as seeks to penetrate the competitive insurance industry.

KUSCCO is planning to leverage on the membership of its 1,700 saccos under its management to source for its customers and increase its market share.

The cooperative societies have similarly been urged explore opportunities under the government’s big 4 agenda especially manufacturing and affordable housing sectors to diversify their investments.

Savings and Credit Co-operatives should trade at the Nairobi Stock Exchange and buy government securities to diversify their revenue portfolios.

Co-operative Alliance of Kenya chief executive Dan Marube said most Saccos currently heavily depend on depend on members savings, internal reserves and deposits fo heir lending.

“This can be taken up as a business decision on the less risky instruments rather than a policy, to raise funds that can be lent to members at affordable rates,” Marube said.

                                                                          

In its draft 2019 National Co-operative Development policy, the alliance proposes that  Saccos participate in national payment system and agency banking.

“The policy objective will enhance financial deepening and investments through interventions in development of a regulatory framework for co-operative enterprises to raise capital using capital market instruments and the establishment of a secondary market for cooperative securities,” says the draft policy stated.

By 2017, CAK had 13,200 Saccos with accumulated savings and deposits of over Sh430 billion, Sh441 billion in loans and Sh601 billion in assets.

The Saccos had a membership of about 5 million persons.

“Despite this notable success, the Saccos are unable to accumulate savings and deposits fast enough to satisfy their members appetite for credit,” says the  policy.

Due to this, Saccos rely heavily on loans from commercial banks to satisfy their members borrowing needs defeating the very purpose of coming together.

The problem is further compounded by the emergence of digital platforms offering access to quick loans.

 

According to Marube, the new venture would be a viable commitment especially if a society has enough funds.

The alliance has also raised worries on the practice of hypothecation, where debtor or third party pledges collateral for credit by financial institutions.

The practice has tended to encourage lenders not to evaluate the business case of the society borrowing which is mainly to increase produce, value addition or revenue, while relying on member earnings or payroll deductions for society cash flow projections.

“The same lenders have tended to continue to recover loans from members’ funds instead of realising the secured assets in case of default,” it added.

Despite this, the co-operatives expect to continue competing with some of the financial institutions over the same space despite their inability to raise funds through the national financial networks.

Source: https://www.the-star.co.ke/business/markets/2019-05-17-saccos-urged-to-buy-government-bonds-invest-at-the-nse/

KUSCCO Ltd today launched KUSCCO Mutual Assurance, an insurance company licensed by the Insurance Regulatory Authority to operate as a life insurer in Kenya. The subsidiary targets individuals, groups, corporate companies and the Co-operative movement.

The subsidiary grew out of the Risk Management department which was a fund that gave SACCOs mutual protection against loan losses. The fund has been operational for over 25 years and has successfully managed the risks of over 1,700 SACCOs, leading to the new strategic expansion to the wider public. The diversification process began in 2016, when KUSCCO delegates approved a change in the By-laws, allowing for creation of subsidiaries. Since then, the Union has been growing existing underwriting business in readiness for an Insurance company.

Speaking during the launch, the KUSCCO Group National Chairman, George Magutu said that through innovative products tailored to meet the needs of the 14 million member co-operative movement, the company would turn-around the low market penetration and bring insurance inclusion to Kenyan Co-operators. “By offering value adding services, we are confident that we can influence co-operators to better manage risks by investing wisely in insurance policies,” he added.

Also present at the launch was George Ototo, KUSCCO Group Managing Director, who added that the company would respond to changing customer needs through research and development, to drive innovation and  disruptions, by offering personalized, affordable and flexible insurance policies. Further, he pointed out that efficient claims settlement systems would lead to an increased customer retention ratio.  “To keep in step with the competition, we will also remain focused on key overarching goals: growing top-line sales while boosting bottom-line profitability, as we increase insurance penetration to include the un-insured and under insured,” he said.

Kuscco to take on insurance firms

Kuscco has secured approval from Insurance Regulatory Authority and wants to ride on sacco members as well as other Kenyans to offer long-term or life assurance business.

Antony Ogutu has been picked as the CEO.

Speaking after the launch Thursday, Mr Ogutu said the insurer will focus on lower to high end products based on sacco movement needs.

“We draw our strength from affiliation to cooperative movement and we want to have tailor-made products to attract the un-insured under-insured,” he said. The insurer becomes the 53rd in the country and has lined up products grouped under individual life, group insurance and deposit administration scheme. Some of the products are education plan, investment policy, term assurance and endowment policy as well as creditor protection cover.

The project has been in the pipeline since 2016 when Kuscco changed its by-laws to allow for creation of subsidiaries. The new entity was running as a risk management department, offering mutual protection against loan losses to 1,700 Sacco.

Kuscco group national chairman George Maputo said innovative products will help the new insurer to tap more into the over 14 million-member cooperative movement. “The risk management fund has been underwriting claims to the tune of Sh900 million and it gives us a good foundation.

https://www.businessdailyafrica.com/markets/marketnews/Kuscco-to-take-on-insurance-firms/3815534-5121952-ib94laz/

Cabinet secretary, Trade and industrialization Peter Munya said the aim of SASRA is to help the sector to comply with certain basic requirements for good business.

He said heads of Savings Credit Co-operative Societies (SACCOs) will undergo vetting to remove any ‘scamsters’ who could conned the public.

CS Munya noted that pyramid scheme founders had invaded the SACCO sector, putting the savings and investments of millions members at risk.

“These fraudsters are everywhere in financial institutions and even in the SACCO sector … we want to form regulations that will deal with them,” he warned, adding that many Kenyans are still wounded from being swindled of their money by ‘ponzi-style’ fraudsters where they were promised returns.

“We want to help ordinary citizens who are investing and want to grow. Investors require regulations that will assure them of the safety of their investments and savings,” he assured.

CS Munya stated that the regulations made will help to re-build confidence in the SACCO financial sub-sector.

“The law and policy that has been there is inadequate to respond to challenges this is why we appointed this task force that has been looking into the sector and consulting with the members of the public to arrive at a frame work that will help the regulatory authority manage the challenges that may arise,” he stated.

Munya suggested creation of a digital platform that would manage SACCO funds and help detect regulation issues.

“Technology is a major driver and enabler of good governance and coupled with the right systems it will provide solutions for the challenges and problems as the emerge,” Munya said.

He concluded that funding for that kind of platform would be required and the government would look into the matter

Source : https://www.capitalfm.co.ke/business/2019/05/taskforce-on-saccos-seeks-stakeholder-input-to-draft-new-regulation/

ISO 9001

KUSCCO QUALITY POLICY

We commit to consistently promote SACCOs through advocacy and provision of quality technical and financial products that exceed the members’ expectations.
We shall comply with the statutory requirements and actively pursue continuous improvement of the ISO 9001:2015 Quality Management System (QMS) processes, capabilities and effectiveness.
In pursuit of our commitment we shall ensure that the quality policy and objectives that have been established and communicated to the Union employees shall be reviewed annually in accordance with the stipulated framework and quality standards.”