Without Credit coverage SACCOs face major financial risk, warns Geminia Life

Innovation is often akin to having different often deep-seated thoughts and insights on ideas, concepts and outlook in what creativity doyens term as ‘thinking outside the box’. Guided by such deep insights and thoughts, Geminia Life Insurance has raised an alarm on the significant financial vulnerability that SACCOs in Kenya face due to the lack of credit insurance to safeguard against loan defaults caused by unforeseen circumstances such as the death of borrowers. The alarm was raised on November 27th, 2024 by Dr. Peter Gichuru, Geminia Life Insurance’ Managing Director (MD), at the Geminia Life Insurance’s headquarters in Upper Hill, Nairobi, during an internal session on the role of life insurance in enhancing SACCO operations in the country.

According to the SACCO Society Regulatory Authority (SASRA) Annual Supervision Report 2023, SACCO loans in 2023 totaled K sh 758.57 billion (B), against members deposits of K sh 682.19 B. However, only 86.33 per cent of the total loan portfolio of regulated SACCOs was deemed as performing. This gap underscores the risks that SACCOs face when substantial members’ loans remain unpaid.

“Credit life insurance is a vital safeguard for lenders, especially SACCOs, as it ensures financial resilience and stability during adverse times and events,” explained Dr Gichuru. And despite the fact and reality that these benefits are on offer courtesy of insurance providers in the country, many SACCOs continue to lend without attaching insurance to loan products, and especially to guarantors, citing systemic challenges, lack of awareness, and /or perceived prohibitive costs. 

On the other hand and moreover, Kenya currently lacks regulations mandating lenders to insure all loan recipients. As a result, the responsibility for unpaid loans often falls on beneficiaries and guarantors, who may be forced to forfeit accumulated savings. 

Consequently, Dr. Gichuru highlighted Geminia Life’s innovative solutions, saying: “Why expose SACCO members’ deposits to financial vulnerability when we at Geminia Life Insurance offer tailored products such as the SACCO Loan Guard? This solution guarantees full loan repayment to SACCOs in the event of a borrower’s death, disability, critical illness, or even income loss.” Essentially, Credit life insurance covers members with outstanding loans, protecting against circumstances that might hinder loan repayment. 

Notably, Geminia Life Insurance Company Limited is a life insurer with over 30 years of experience in addition to being wholly Kenyan-owned. The company offers an extensive range of solutions and products that include endowment covers, education plans, credit life insurance, mortgage insurance, group life cover, last expense policies, pensions, and savings solutions. 

Known for financial stability, good governance, and outstanding customer service, Geminia Life continues to empower individuals and organizations to secure their financial future, one product at a time.