The bedrock of the insurance industry is claims payment. PHOTO | ANTHONY OMUYA
Looking at insurance claims figures for the most recent quarter, there’s nothing rosy which denotes the slow decline of the insurance industry in Kenya.
We are looking at liability, non-liability and long-term insurance business claims numbers.
Liability are third parties’ claims while non-liability are the insured person’s claims.
Long-term insurance business claims are life insurance claims.
Why would a company not make returns on the long-term insurance business? Is there a bigger problem than envisaged? But it’s better for a company not to make returns than make returns with wrong figures.
The settlement for liability claims remains very low, showing there’s a problem for third parties when claiming from insurance companies.
The process is usually tedious and frustrating and most companies never pay unless they are taken to court. But why must companies be taken to court to meet their obligations?
Why subject insurers to lengthy court processes before the companies can pay?
Isn’t it a form of corruption for companies to waste time and money through the processes while the claims money they should pay is provided for but they trade with it and it earns interest?
In the end what they settle as your claim is the interest accrued from trading with your money. An analysis of non-liability claims figures under general insurance for the quarter shows a marked improvement with some companies paying up to 85 per cent of their obligations.
But some companies met only two per cent of claims for the quarter.
That big disparity is what makes an analysis of companies very important with the regulator obliged to answer why some of them are still in the industry.
As industry stakeholders we know a lot of the goings on in the industry which members of the public are often not privy to.
As a result, we note that some figures reflected in the report appear to have been cooked to portray some companies as doing well when they are not.
This is not the first time I am pointing this out.
So, why does is it keep happening every quarter? Is it because of the impunity being experienced in the country?
We know of companies that are having problems paying claims to the extent that some garages have refused to accept their accident cars.
But an analysis of the released quarter two figures shows that the firms are in the top 20 bracket of paying claims.
They have been grouped with companies that have a very good track record of claims payment, making a mockery of the reports from the Insurance Regulatory
Authority (IRA). It is not enough for IRA to state in it’s report that: “The publication of any summary of an insurer’s return in a report does not necessarily mean that the returns so have satisfied all the requirements of the Insurance Act, Cap 487, or that the authority approves the accuracy of the contents of the returns.”
It is perpetuating corruption and impunity in the sector when presented numbers are cooked and the regulator provides a disclaimer on their accuracy.
This is what is finishing the insurance industry in Kenya.
Any information regarding important numbers needs to be verified and audited before they are released.
The bedrock of the insurance industry is claims payments and when that does not happen, let not industry mandarins waste people’s time in lengthy analyses of how to improve penetration in the industry while basics have not been met.
Washington Ndegea, chairman Bima Intermediaries Association of Kenya.
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Note: The results are not exact but very close to the actual.
