Market News

IRA deregisters seven brokerage firms for failing to remit premiums

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Late remittance of premiums exposes businesses, individuals and households to losses of their properties and investments in case of disaster. FILE PHOTO | NMG

Seven insurance brokers were deregistered last year by the Insurance Regulatory Authority (IRA) for non-compliance with the Insurance Act, amid tougher oversight on agencies flouting rules on remittance of premiums.

The Association of Insurance Brokers of Kenya (AIBK) disclosed the number of firms deregistered but added that none were drawn from its membership.

Last year, the IRA cracked down on insurance agents and brokers who had not met its stringent license renewal conditions such as mandatory remittance of outstanding premiums to insurance companies.

“There were some whom we understand were operating in the Kenyan market who were deregistered…seven maximum,” said AIBK chairman Anthony Mwangi, while not divulging specific details of the affected companies.

“Ninety percent of our members have been licensed, meaning they passed the threshold that was required by the regulator.”

Last year, half of all the 213 insurance brokerage firms in the country were set to be delisted for non-compliance with the Act.

This followed an increase in outstanding unremitted premiums that had grown to Sh43 billion, equivalent to 19.8 percent of the Sh216.2 billion gross premiums that Kenya’s 37 insurance firms underwrote in 2018.

Late remittance of premiums exposes businesses, individuals and households to losses of their properties and investments in case of disaster.

This means risks covered, which are in excess of Sh500 billion, are not recognised under the “cash and carry” principle.

The principle stipulates that if an insured party suffers loss before the premium is remitted to the insurer then the insured party cannot be compensated.