The government has delisted 38 insurance brokerage firms in the latest bid to streamline the sector in accordance with the set regulations.
According to Insurance Regulatory Authority (IRA), the delisted firms failed the compliance tests and did not remit their premiums on the stipulated time.
Data from IRA indicate that the number of registered firms dropped from 222 to 184 in 2022.
Defending the move to take action against the 38 firms, the regulatory body added that the firms did not submit evidence on time to substantiate their eligibility to continue with operations.
"It has taken too long to license some of the brokers. Some brokers are yet to give us the evidence (premiums remitted to insurance firms). It doesn’t mean that there are no [new] brokers. But, because of that process, last year we de-gazetted 13 brokers because they were not able to pay their premiums," IRA stated.
Kalai Msee, a senior manager in charge of supervision, licensing, and enforcement at IRA, quoted the amended Section 156 of the Insurance (Amendment) Act 2019 that was enacted to enhance prompt payment of premiums to underwriters. This amendment was aimed at addressing the perennial problem of late remittance of premiums to insurance firms.
Before the Act was amended, insurance brokerage firms were allowed to hold premiums for about 60 days before remitting them to underwriters.
The policy was changed following a ruling by the High Court which declared it unconstitutional.
The government has recently been instituting changes in the insurance sector to ensure policyholders get better services. In one of the recent rulings, the court verdict directed the government to pay policyholders when an insurance company collapses.
While delivering the verdict, Justice George Odunga noted that the government and IRA would be held responsible for insurance companies that collapse.
"Where the state fails to protect the insured against unscrupulous insurers yet ensure that the insured take insurance covers at their costs, it is only just that the state takes responsibility for its failure to regulate the players in the industry, otherwise it would be assisting those insurers who use statutes as instruments of fraud," Justice Odunga explained.
Justice Odunga noted that the government and the regulatory body are in a position to establish if an insurance firm was on the verge of going under and take remedial measures.
"Insurance companies do not just collapse. Before they do so, there are usually tell-tale signs or indicators which can easily be discerned by hawk-eyed officers of the first respondent, if they are keen enough, instead of waiting until the insurer is unable to meet its statutory obligations before moving in to perform the last rights," Odunga ruled.
