- Insurance firms have termed the one-month period backed by the Insurance Regulatory Authority (IRA) unrealistic saying they needed time to investigate a claim before payment is made.
- At present insurance companies have 90 days to pay a claim after all documentation has been filed and a discharge voucher signed.
- The IRA has previously noted the core business of insurance companies is to pay claims and thus they should be able to do this within the shortest time possible.
Insurers are are on a collision course with the regulator after they started lobbying Parliament to reject a Bill proposing to cut the claim settlement period to 30 days.
The underwriting firms, through their umbrella body Association of Kenya Insurers (AKI), have termed the one-month period backed by the Insurance Regulatory Authority (IRA) unrealistic saying they needed time to investigate a claim before payment is made.
“We are lobbying Parliament not to sign the Bill as it is. We have put in our communication... and hope we will be invited by the Trade and Finance committee to demonstrate why this is impractical,” said AKI chief executive Tom Gichuhi of the amendment Bill.
At present insurance companies have 90 days to pay a claim after all documentation has been filed and a discharge voucher signed.
“This has the effect of reducing the number of days the insurer has to accept or deny the liability, determine the amount due, identify the claimant and pay the claimant within 30 days (as opposed to 90 days) from the time of reporting the claim or from the time of judgment,” said IRA of the Bill.
Insurance companies have been accused of dragging their feet in completing the documentation process by making many demands on the insured.
The process includes notification of the accident by the insured to the insurer, admission of liability by the insurance company and determination of the amount payable as claim.
More than half general liability insurance claims—at 52.9 per cent—were settled after 90 days while 8.3 per cent of the general non-liability claims took more than the stipulated period according to a recent survey by IRA.
Insurers take more than 90 days to settle 24.8 per cent of life claims. Insurance companies can still seek a 30-day extension on the settlement period.
The survey also found more than half the claims sampled were awaiting documentation underlining the delays in the sector.
Three quarters of general insurance claims were awaiting documentation in order for them to start running the 90 day clock as half were still in the processing period.
Mr Gichuhi said some of the claims require investigations to determine the size of the claim.
“Those that are verifiable immediately such as medical are settled in less than even 30 days,” he said.
The IRA has previously noted the core business of insurance companies is to pay claims and thus they should be able to do this within the shortest time possible.
Delayed claims offer an opportunity for the insurance company to continue reaping from where they have invested the cash but at the inconvenience of the claimant. The AKI will be lobbying to retain the status quo.
Last year the insurance sector had claims worth Sh49 billion up from Sh41.8 billion a year earlier.
The insurers association successfully lobbied Parliament to increase the settlement period to 90 days from 60 days in 2006 and hopes to succeed again this year.