Market News

Insurance brokers eye first pay rise in 30 years

Mr Nelson Omolo. FILE PHOTO | NMG
Mr Nelson Omolo. FILE PHOTO | NMG 

Insurance brokers are pushing for an increase of commission rates — the first in 30 years — in a move that could see premiums rise across the economy.

Association of Insurance Brokers of Kenya (AIBK) chairman Nelson Omolo said low commissions have forced brokers to adopt unfavourable measures to survive, including leasing dingy offices.

“Of deep concern is the heavy responsibility conferred on brokers by the Insurance Act, while commission rates are not reflective of the same.

“The Insurance Regulatory Authority (IRA) has in the past promised to look into the possibility of reviewing brokers’ commission rates upwards and we are hopeful this will happen soon,” he said.

The commission regime last reviewed in 1986 provides for a 10 per cent commission for every motor vehicle policy, 17.5 per cent for marine, 10 per cent for burglary and theft, 20 per cent for personal accident, eight per cent for group life and 10 per cent for medical insurance.

However, this is likely to run into trouble after the High Court ruled that IRA could not fix premium rates.

Mr Omolo also urged the government to recognise the brokers’ association saying this would enable them handle disciplinary matters internally to safeguard against abuse.

The lobby, he said, had been rendered powerless with some errant brokers giving the entire fraternity a bad name. AIBK is not allowed to revoke their practicing certificate even as the law makes it mandatory for all brokers to become members.

“We have instructed our advocates to advise us on legal recognition and on handling all other matters pertaining to the industry and the players including public procurement of insurance brokerage services as well as disciplinary cases involving errant members,” he said.

To boost their image, the AIBK said it had engaged the College of Insurance to train brokers as well as equip them with information technology skills that will promote sale of insurance products online.

“We usually educate the public on the importance of insurance policies...Our contribution is immense and cannot be wished away just because some banks have acquired insurance companies or have signed partnerships with them,” he said of bancassurance.