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Intertwined Lattice of Property and Insurance

Intertwined Lattice of Property and Insurance

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Published by Aamera Jiwaji
Career insurer uses insurance agency model to develop business network to sell property in counties
Career insurer uses insurance agency model to develop business network to sell property in counties

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Published by: Aamera Jiwaji on Mar 05, 2014
Copyright:Attribution Non-commercial


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Nairobi Business Monthly 
t wasn’t by design. But when David Kimathi started his property company Daveland Enterprises after 22 years of experience in the insurance industry, he replicated the agency model that he had worked so intimately with while in insurance. And for his business, it was the golden stroke of success.Less than a year down the line, his company has a neat network of 16 agents that comple-ments the country’s devolved structure and allows him to minimise operational costs while maximising earnings for his agents and himself.
Weighing the risks
Despite surface di
erences between the two sectors, Mr Kimathi found that the inner work-ings of property and insurance were in fact very similar.First, “Property is related to insurance because in both you must know how to manage the risk,” he said. While with insurance, risk is managed by hedging against an uncertain loss, in the property market risk involves the possibility of financial loss from owning a real estate investment. Mr Kimathi added that a career in both fields relied heavily on self-supervision simply because it involved a large amount of travel and flexible working hours.But as a person who had sold his first insur-ance policy to a fellow passenger while in a bus to Nairobi Serena, an unconventional and unregulated work environment appealed to him.The agency model in insurance - which is now widely applied in East and Southern Africa - is built on a description of agents as either tied, independent or semi tied. It is a categorisation which identifies the level of
Property &Investments
 An intertwined lattice of property and insurance
The agency model is one that Mr Kimathi helped to develop during his tenure with AIG, Insurance Company of East Africa (ICEA), Jubi-lee Insurance and Monarch Insurance - compa-nies at which he supervised over 300 small and medium agents through various distribution channels - and when he transitioned to life as an entrepreneur in the property market, he carried the learnings of the agency model with him.From his experiences in insurance Mr Kimathi knew that because independent agents are not formally employed by a particular company, they have the liberty to pursue their own paths as long as they have been legally licensed to sell insurance.“These agents normally meet a lot of people,he said, explaining how in the course of sell-ing car or house insurance, these agents often became privy to a plot of land that was for sale, either for commercial, residential or agricul-tural reasons.“What I am doing,” he continued, “is picking the established agents and recruiting them as my agents.”“They know if a person is selling a house or a plot, and they introduce him to me. Once I have sold that house, I give them a part of my commission,” he said.In a house sale in April, for instance, Mr Kimathi earned commission of Sh200,000 of which he gave Sh75,000 to the agent.This allows Mr Kimathi to cut on opera-
Career insurer uses agency model to develop property  business that spans counties
In the course of selling car or house insurance,
these agents often became privy to a plot of land that is for sale
allegiance a particular agent bears towards an insurance company and allows for vary-ing extents of fidelity.
Modelled on the agent
While the tied agent serves one insurance company exclusively, the independent agent is nonpartisan in recommending an insurer. The semi tied agent - midway between the two - is tied to one insurer but when his company does not o
er a particular line of products, he can sell products from another insurer. However as a result of their semi tied status, they are entitled to an o
 ce space and to basic communication tools.
David Kimathi of Daveland Enterprises.

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