Errant insurance brokerage firms could be deregistered by the Insurance Regulatory Authority(IRA). The purge follows the failure by brokers to remit collected premiums to insurance firms and also settle commissions owed to agents.
“Fourteen insurance brokers did not respond to our circular. We are working on that and they are subject to de-registration,” said Kalai Musee, IRA Acting Chief Technical Manager.
In 2019, the IRA sent a circular to 44 firms inquiring about the status of outstanding premiums. The regulator also asked insurance companies to clear commissions owed to insurance agents to cushion them from the financial strains brought about by COVID-19.
This drastic action by IRA comes at a time when the Insurance industry is suffering from negative effects of COVID-19 on the underwriting business.
A growing number of policyholders have canceled their policies or fallen back on payment of monthly premiums while insurance firms are straining to settle claims.
Data from IRA shows that insurance brokers hold KSh 14.8 Billion in outstanding premiums to insurance companies.
In 2019, 221 Insurance Brokers were licensed by IRA to undertake the business. In February, 2020, 82 brokerage firms were denied operating licenses for failing to remit outstanding premiums.
Licensing requirements for an insurance brokerage firm include; registration fee of KSh 10,000, Bank Guarantee of KSh 3 Million, and professional indemnity insurance policy of KSh 10 Million.