In June, Members of Parliament passed President Uhuru Kenyatta’s memorandum on the Insurance bill without amendments after the National Assembly failed to raise at least two-thirds majority members to overturn the memorandum.
As per the Bill, intermediaries such as brokers will no longer collect premiums from policyholders on behalf of insurance firms implying that policyholders will be required to pay their premiums directly to the underwriters once the bill has assented into law.
Normally, insurance brokers and agents are required to collect premiums and remit them to companies within 30 days. The original version of the Bill sought to prevent the intermediaries from collecting premiums but MPs amended it to provide that they remit the premiums within 14 days.
“An intermediary shall not receive any premiums on behalf of an insurer. No insurer shall assume risk in respect of insurance business unless and until the premium payable thereon is received by the insurer,” reads a section of the new Bill.
Although the president rejected the bill through a memorandum, the Association of Insurance Brokers of Kenya (AIBK) the umbrella Professional Association for all Insurance Brokers in Kenya has sought the intervention of the laws of the land.
Insurance brokers have moved to court to suspend the implementation of a new law blocking them from collecting premiums on behalf of insurance companies. Through the insurance brokers association, the group now wants the National Treasury and Attorney General and the Insurance Regulatory Authority stopped from enforcing the amended section of the insurance act.
In the petition, the association says the implementation of the law risks plunging over 5000 brokers to unemployment. The insurance brokerage industry has created job opportunities for many Kenyans and many will be affected if the business is shut down.