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Kenya issues licences to foreign reinsurance brokers after law change

IRA

IRA chief executive Godfrey Kiptum. FILE PHOTO | NMG

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Summary

  • The Finance Act 2021 amended the Insurance Act to provide for the regulation of foreign reinsurance brokers by amending the definition of brokers, which previously excluded those who are not resident in Kenya.
  • The Insurance Regulatory Authority (IRA) has issued a circular calling on all reinsurance brokers that have operations in the country to set up a physical office in Kenya and get license from the regulator.

The insurance industry regulator has started licensing foreign brokers who linked local firms with reinsurance contracts abroad.

The Finance Act 2021 amended the Insurance Act to provide for the regulation of foreign reinsurance brokers by amending the definition of brokers, which previously excluded those who are not resident in Kenya.

The Insurance Regulatory Authority (IRA) has issued a circular calling on all reinsurance brokers that have operations in the country to set up a physical office in Kenya and get license from the regulator.

Chief executive Godfrey Kiptum said changes in the law were put in place to protect local players who use foreign brokers to buy re-insurance products.

“The provision came into force in this Finance Act. It is meant to protect local players where you see some of them send money out to brokers and when something happens they come back to us,” he said

“We issued the circular this July but it is for the new contracts that are kicking in from January next year.”

Reinsurance, also known as insurance for insurers, is whereby insurers transfer portions of their risk portfolios to other parties to reduce the likelihood of paying a large obligation resulting from a claim. Kenya has 18 licensed insurance brokers.

Mr Kiptum said that most of the foreign brokers operate from the UK, India, and South Africa.

The regulation of Reinsurance brokers is likely to enhance the IRA’s supervision of insurance industry players.

The Finance Act 2021 has also amended the Insurance Act to remove the requirement to have the Kenya Reinsurance Corporation certify reinsurance contracts.