From his CEO chair, Alex Bahizi stared straight ahead, but not at the future; he was reflecting on the last ten months that BK General Insurance, a subsidiary of Bank of Kigali, has been in operation; by end of June, Rwanda’s newest insurer had netted a profit of almost Rwf80 million.

It is an almost accepted culture that making a loss in the first year of operation is ‘okay’ for any start-up, regardless of the industry. Yet BKGI, as it is known in short, seems to be setting a new trend starting off with profits moreover in an insurance industry where everyone is struggling.

Having started operations in September 2016, BKGI has, in a matter of ten months managed to register over Rwf2 billion in gross premium income; that is half the Rwf4 billion that the business has set for itself as target by end of this year.

But the industry is struggling. Recently, the regulator, National Bank of Rwanda put a pause on registering any new insurance companies in hope that it will give a chance to the industry’s current fourteen players to turn around their fortunes. Observers are predicting mergers and acquisitions in coming years as wobbly insurers seek salvation.

"As of end of June, 2017, we had registered a net profit of Rwf76 million,” revealed Bahizi, BKGI Chief Executive Officer.

That BKGI is already making profits in its debut year is an industry record but observers will be keen on seeing whether the new player can sustain that profitability where some of its ccompetitors are failing so miserably, struggling to settle client claims.

By 2020, which is in four years’ time, Bahizi wants BKGI to command atleast 12 per cent market share of Rwanda’s insurance industry; in real terms, that will mean a gross premium of about Rwf20 billion.

That kind of ambition is impressive and will certainly excite shareholders. But context is also important in determining where that growth will come from in a market where buying insurance is not a deep-rooted culture among businesses, especially SMEs which dominate the economy.

Currently, gross premium for all fourteen players combined is said to be not more than Rwf70 billion with the current market leader claiming just about Rwf10 billion of that total.

But in context, that modest figure should be appraised fairly as it reflects the thin insurance penetration said to be less than 3 per cent; for BKGI to realise its ambitious targets, it will need a strategy that creates new business opportunities to widen the current insurable base.

BK brand influence

It is fair to say that BKGI was not expected to struggle in its first-year owing, mainly to the brand influence of its mother company, Bank of Kigali.

For instance, where many insurance firms start with capital of Rwf1 billion, which is the regulatory minimum required by central bank, GKGI started with Rwf5 billion, four times more.

That initial capital is pretty much intact, as the company has been comfortably running on generated revenue, in the last ten months, Bahizi said.

Elsewhere in the industry, the elephant in the room for many insurance firms is undercapitalisation which has seen many of them struggle to settle claims.

Today, commercial courts are populated with several big-money suits of disputed client claims from insurance companies; this trend has helped discolor the reputation of the industry partly explaining the low appetite for insurance uptake among businesses and individuals.

This could also explain BKGI’s early success; the timing was right. Opening at a time when existing firms were struggling financially and clients frustrated by cumbersome claim processes, news of a reliable insurer who settled claims in record time was always going to win over customers.

With Rwf5 billion in capital, BKGI also has no liquidity woes. This means it can settle genuine claims from clients in a short time without the need to buy time.

For instance, earlier this year, BKGI set another industry record when it settled a claim within just two hours, after the file was submitted. The insurer is also a darling of vehicle garages, known for prompt settlement of bills for clients with all vehicle insurance claims.

Strong management

That confidence has helped BKGI woo big money institutional clients over the last ten months and is likely to gain more, thanks to the BK brand influence and reputation that is widely recognised and respected on the market.

"As an insurance company, our license may just be a year old, but as a brand, we have been around for the last fifty years and this is a source of confidence among our customers,’’ Bahizi said.

It is not just about tagging along the BK Brand, but also adopting its values of great customer service, integrity, professionalism and reliability; these are values that the industry badly needs if it’s to rebuild its tattered image.

Behind BKGI’s early success is also the factor of strong leadership and management led by Bahizi, formerly head of Bank of Kigali’s legal and recovery department, charged with mainly enforcing loan repayment.

When the firm opened, it went out in full force and hired some of the industry’s most talented professionals to form a team that is behind its current success.

A lawyer by training, Bahizi’s first job after university was as a legal officer with a public insurer, selling social security cover and was part of a team assigned to reform Rwanda’s social security system.

Three years into the job, BK came calling, and hired him as a legal manager, a position he held for three years before being elevated to head the department of legal and recovery. Three years into the job, he was selected to lead BKGI.

It is clear from his record that Bahizi has a deep understanding of the country’s business risk environment and, as a lawyer, not only knows how to identify risk but also how to mitigate it while remaining profitable.

"Insurance is about managing risk and my training as a lawyer as well as in my professional practice has been directly in that area,” he said.

A great team leader, Bahizi is also known for being detail oriented and almost overly hands-on for a CEO; some have accused him of being a micro-manager.

"When you’re managing a start-up, micro-managing can be forgiven until the business has developed strong internal structures to run smoothly,” he counters.

editorial@newtimes.co.rw