The Insurance coverage Regulatory Authority(IRA) lately released the unaudited final results for the fourth quarter of 2018 displaying an upward trend in insurance coverage uptake with premiums increasing four.two % to Sh216.37 billion.
Especially, extended-term insurance coverage enterprise grew by five.three % to Sh87.34 billion although commission payments for life enterprise went down 1.two % to Sh65.673 million. That is a massive figure and concerns need to be asked as to exactly where these commissions belonging to agents go to.
Insurance coverage agents quantity far more than 10,000 in Kenya and a half of that is unlicensed. About five,000 of the licensed agents do life insurance coverage.
Several agents leave the insurance coverage business each and every year due to loss of commissions via unfair implies like clawback, a technique exactly where the organization gets back all the commissions the agent earned.
That implies that the development of life insurance coverage would be up quite a few instances more than the announced figures if right practices have been place in spot. The minimal development of life insurance coverage is a excellent trend for the business and Life need to be encouraged due to the fact it is a single of the most important sources of harnessing funds for improvement.
The minimal penetration of insurance coverage has been accomplished via the work of the agents and the explanation the business does not see it match to encourage far more to join the business is any one’s guess.
Retrogressive proposals in the Insurance coverage Act like occurred final year proposing that intermediaries not deal with premiums need to be carried out away with and friendlier measures introduced.
The regulator whose mandate is to supervise and market the improvement of the business is not practising the exact same with the agents and insurance coverage development will never ever occur due to the fact what need to be carried out is not getting carried out.
The report also talks of instruction by the regulator via the Executive Certificate of Proficiency Programme – ECOP.
When the thought is excellent, its implementation falls quick as it is not getting carried out in consultation with other stakeholders and its efficiency is nearly zero if not zero.
Handful of, if any, of educated individuals ever join the insurance coverage business. Why is it getting carried out year in year out but it has been verified to be ineffective? It is also acquiring a massive chunk of the price range at IRA.
Marine insurance coverage, regardless of the government creating it compulsory to take up cover for imports and exports locally, is declining in uptake — a three.three % drop in its uptake compared to final year’s figures.
It need to be noted that insurance coverage cover on imports and exports can not be forced on corporations due to the fact it would be going against international trade practices. A query arises no matter if the law has been amended to compulsory insurance coverage for imports and exports, let alone insuring locally.
Fraud continues to be a important challenge in the business and this report has various sectors reported to have instituted or perpetrated fraud.
The report is confusing and nearly meant to demonise a particular section of the business, exactly where fraud by agents is noticed as the highest.
The other group is insurance coverage organization staff. This report is probably malicious, might be meant to attract ill-will from the public due to the fact the other fraud instances in the report do not show who initiated them but they kind far more than a quarter of the tally.
It need to be noted that fraud can not occur in isolation and that far more than 5 groups of business players are involved, namely the police, insurance coverage investigators, motor assessors, organization staff, the clientele and garages.
The IRA need to find out to give credible reports without having demonising any one.
Washington Ndegea Chairman, Bima Intermediaries Association of Kenya.