Reinsurers’ body fined Sh721,715 over price fixing

The Competition Authority of Kenya (CAK) has fined the Association of Kenya Reinsurers (AKR) Sh721,715 for unfairly setting minimum insurance rates to be charged to members of the National Intelligence Service (NIS).

The competition watchdog has charged the association with price fixing and unfair trade practices saying AKR set the minimum applicable premiums for the renewal of NIS’s group life scheme for the 2013/2014 financial year.

AKR in October 2013 set recommended a minimum premium rate of 15 per mille (cost per thousand) to insurance companies, a move contrary to the Competition Act, which outlaws the use of such limits.

The reinsurers’ body is made up of Kenya Reinsurance Corporation Limited, the African Reinsurance Corporation, East Africa Reinsurance Company, Zep-Re and the Continental Reinsurance Limited Kenya.

“Insurance companies are required to use an independent actuary to come up with their own individual premium rates which they file with the IRA (Insurance Regulatory Authority) for approval,” said Wang’ombe Kariuki, CAK’s director general.

“The CAK further compelled the Association to give a written undertaking to desist any future conduct that contravenes the provisions of the Act. The Association has complied with the Authority’s decision.”

This is the second public fine meted out by the CAK, as it moves to stamp its authority in the country.

In June last year, CAK fined the Ukwala and Tuskys supermarket chains Sh5.3 million for participating in what the authority termed as restrictive business practices, after the latter took over several of its rival’s stores in Nairobi without seeking approval.

The authority is also embroiled in a legal battle with the Kenya Tea Development Authority over a damning report indicating prevalence of cartels in the industry and price manipulation at the tea auction that cut farmers’ earnings.