Bupa Teams With Local Insurance Provider
BMI View : Economic growth and the resultant increases in Kenya's middle-class population will lead to rising demand for quality healthcare services as incomes improve. Investment into the healthcare sector by insurance companies in order to meet the demand for services is therefore an advisable business strategy.
In early January 2013, leading UK international healthcare company Bupa announced a partnership with Kenya-based Jubilee Insurance. The partnership focussed on Jubilee Insurance providing Bupa's health insurance products to its Kenyan customers. While Bupa established itself in the Kenyan health insurance sector over a decade ago (via its partnership with Healthline Solutions), this recent affiliation with a second local company, moreover East Africa's largest insurance group, will boost its presence in the fast-growing, competitive health insurance sector.
Established in 1937, Jubilee is the largest composite and medical insurer in East Africa, with a 32% market share in Kenya, 35% in Uganda and 15% in Tanzania. Jubilee operates in Kenya, Uganda, Tanzania, Burundi and Mauritius, serving over 300,000 customers across the region. Further highlighting the company's extensive revenue stream, Jubilee is the only ISO certified insurance group listed on the three East Africa stock exchanges - the Nairobi Securities Exchange (NSE), Dar es Salaam Stock Exchange and Uganda Securities Exchange.
BMI believes investing in Kenya's healthcare sector is an advisable business strategy, as the sector's strong growth forecast has the potential to provide investors with significant returns on investment.
On the back of economic growth, a growing population, a growing awareness of preventative healthcare and an increasing burden of non-communicable disease, we forecast health expenditure will rise from KES155.50bn (US$1.84bn) in 2012 to KES224.86bn (US$2.17bn) by 2017. The Kenyan government's contribution to healthcare is expected to increase from 44.07% in 2012 to 47.79% in 2017.
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Furthermore, Bupa's focus on the provision of health insurance plans for businesses in Kenya - via the recently launched Vital Africa product, an 'emergency only' plan which ensures customers get the emergency treatment they need, anywhere in Africa - is a sound business plan.
Kenya's economy and its role as a regional leader and industrial hub are complemented by having the region's most open business regime, making it a regional investment magnet. Once a bastion of public sector control over the economy, the government has loosened the reins. Now multinational firms and other private investors play a leading role in business.
Some of the multinationals that have recently established a presence in the country include General Electric, Google, IBM, Visa International, Pepsi, Nestle, Foton Automobiles, World Bank's International Finance Corporation (IFC) and South Africa's FirstRand Bank. The past three years have also seen service industry multinationals such as PricewaterhouseCoopers (PwC), WPP, Bharti Airtel, Huawei and Procter & Gamble (P&G) announce plans to make Nairobi their headquarters in Africa.