Businesses, individuals and households have spent Sh43 billion in premiums on non-existent insurance covers after agents failed to remit the payments to insurers, exposing the customers to heavy losses when they make compensation claims.
The Insurance Regulatory Authority (IRA) has disclosed in court documents that insurance brokers collect billions of shillings from customers but fail to remit the money to insurance companies as required. This means that the 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 cannot be compensated.
