Effects of Distribution Agents Networs on Financial Performance of Selected Life Insurance Companies in Rwanda

Harelimana JB

Published on: 2023-08-02


The purpose of this study is to determine the effects of distribution agents’ networks on the financial performance of 3 life insurance companies in Rwanda (Sanlam vie Plc, Sonarwa Life Plc., and Prime Life Insurance). Life insurance in Rwanda has very low market penetration while other classes of insurance are relatively strong, hampering financial performance in recent years. In an attempt to reverse the market penetration landscape, life insurance companies have started implementing various distribution channels, including agency distribution channel. The primary objective of this study is to assess the impact of distribution agents on the financial performance of life insurance in Rwanda. The methodology covers all life insurance companies in Rwanda. Data were collected using Central Bank's annual reports, interviewing 48 life insurance managers, and both documentation and interview techniques. A qualitative study showed that there was a statistical mean difference between before and after life insurance companies introduced the effective agency as distribution channel. The findings indicate that the life insurance companies in Rwanda were performing poorly before introducing agent networks: The number of new policies/ contracts accepted per year was 34,829 on average, the amount of premium income per year was 6,430 billion on average, the total assets was amounting on average 33,853 billion per year , after introducing Agent networks, the performance changed: the new incepted policies per  year grew from 34,829 to 113,084 on average implying an increase of 325%, the premium income written per year grew by 256% from 6,430 billion to 16,506 billion on average per year. Total assets followed almost the same trend as they grew by 162% per year to reach 54,912 billion on average. The company’s net income increased significantly after using   agents networks in products distribution.In conlusion, the findings revealed that without them the life insurance business could not grow to achieve the performance we are observing.