Insurance: Kenya reforms compensation system
The Kenyan government is looking to amend the law on insurance in order to promote faster compensations and give policyholders a better protection.The Kenyan government is looking to amend the law on insurance in order to promote faster compensations and give policyholders a better protection.
This move is partly due to the fact that the Policyholders Compensation Fund is estimated to be holding over Sh1.5 billion (€13.1 million), as no policyholder has yet been able to get compensation due to rules stating that a firm must be wound up before compensation can be processed.
National Treasury Cabinet Secretary Henry Rotich proposed amendments to the Insurance Act, giving insurance clients a say in liquidation of firms.
"I propose to amend the law to expand the mandate of the Policyholders Compensation Fund to include participation in the liquidation process of insurance companies," he said on June 14th, quoted by the Star.
Last month, the Insurance Regulatory Authority (IRA) has issued new guidelines aimed at increasing customer protection and strengthening confidence in the insurance sector, whose market penetration only stands at three per cent in Kenya.
Insurance product advertisements, employees and agents will face closer scrutiny when the new rules come into effect from June 30th.
"The objectives of these guidelines are to strengthen public trust and consumer confidence in the insurance sector and minimise the risk of insurers adopting business models that are unsustainable or pose reputational risk," states the document.