The Insurance market in Kenya has been under pressure for underperformance and numerous complaints from clients. Industry regulator had set tough licence renewal conditions but only a handful of Insurance brokerage firms met the conditions. Now some of them have delisted for non-compliance with the Insurance Act, effectively barring them from taking up any new business this year.
The Insurance regulating Authority has gone hard on these brokers, denying a third of these insurance companies operating licences for failure to remit premiums to their underwriters among other reasons. 80 insurance brokerage firms have fallen victims, from a total of 213 as at last year. The regulator has issued stringent conditions for the renewal of their licenses including mandatory remittance of all outstanding premiums owed to insurance firms. This follows a sharp increase in outstanding premiums that had grown to Ksh43 billion, an equivalent of the Ksh 216.2 billion gross premiums
Many businesses, individuals and households who have diligently paid their premiums remained exposed to loss of their property and investments, under the “cash and carry” principle. The principle states that if an insured party suffers loss before the premium is remitted to the insurer then the insured party cannot be compensated.
Currently, the broker is battling a court case with the regulator in court seeking to prevent the latter from criminalising handling of cash from clients following its claims that brokers are the primary cause of delayed premiums. In their defence, some insurance brokers have claimed that they are struggling to recover millions in premiums from collapsed of companies as some of the outstanding premiums were from payment arrangements that allowed corporates to pay in instalments.
Association of Insurance Brokers of Kenya (AIBK) National Chairman Nelson Omollosaid that the 80 brokerage firms were engaging the regulator and more are likely to get cleared.