The Insurance Regulatory Authority (IRA) is proposing a reduction in the time insurers take to pay claims to within 30 days from the day they are lodged by claimants in a fresh push to protect consumers.
IRA says in new draft rules the average of 90 days it usually takes to settle claims is "long" and has led to consumer complaints resulting to lack of trust and negative perception of the insurance industry.
The Insurance Regulatory Authority (IRA) is proposing a reduction in the time insurers take to pay claims to within 30 days from the day they are lodged by claimants in a fresh push to protect consumers.
IRA says in new draft rules the average of 90 days it usually takes to settle claims is "long" and has led to consumer complaints resulting to lack of trust and negative perception of the insurance industry.
"Over 70 per cent of complaints by consumers of insurance services concern delayed settlement of claims. The statutory period for claims payment is 90 days," says IRA.
"Other markets have a period of 30 days on average. The 90 days period is quite long."
IRA argues that persistent delays of claims payment have hurt the sector's growth by dampening consumer confidence.
The delays, it says, have been fuelled by inefficient claims process, lack of experts to perform loss adjustments for specialised areas (for example crop cutters and calculating agents in the agricultural sector), under-capitalised insurers, and insurers with low liquidity.
General insurance claims incurred by insurers rose 16 per cent to Sh59 billion in 2019 from Sh49 billion in 2015, an IRA report shows.
It's new National Insurance Policy aims to address the delays and also other challenges that continue to hinder the development of the industry.
IRA said in October last year that 20 insurance companies or 35 per cent of 56 licensed businesses were facing capital shortfall impacting on their claims paying ability on time.
The collapse of several insurance companies over the years has exposed policyholders to risks and losses of benefits, further denting confidence and hindering the sector’s growth.
The policy by IRA, according to Treasury secretary Ukur Yatani, will address low level of public awareness on insurance products and services, low penetration rate and coverage and concentration of insurance in main urban areas.
It will also address slow adoption of technology by the industry, low contribution of life insurance in the overall insurance business, limited underwriting capacity of the insurance industry and gaps in the legal and regulatory framework.
Further, it will also seek to cure the relatively poor financial performance by most of the general insurance companies and poor perception about the insurance industry.
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