The proposed Insurance (Amendment) Bill will see fraudsters jailed for a period of five years in addition to paying 10 times the amount exploited in fraud. If passed to law, the bill, now at the legislative stage of the committee of the whole house, will also expunge the section that allows brokers to collect premiums from customers on behalf of the insurance companies.
Fraud has consistently marred the insurance industry, with the market statistics indicating that there is a 40 per cent chance that every claim incurred by the players is fraudulent.
“The bill seeks to amend the Act by introducing a legal provision creating offences on insurance fraud, including penalties intended to address the problem of insurance fraud that continues to be a major challenge to the stability of the insurance industry in the country,” part of the bill reads.
Association of Insurance Brokers of Kenya are up in arms against the impending law, as it will destabilise its members’ businesses.
“We all know that insurance brokers are the intermediaries, meaning that we get insurance consumers and take their business to be insured,” said its chairman Nelson Omollo.
The bill was introduced by National Assembly’s Finance committee chairman Joseph Limo on behalf of the National Treasury as part of legislative reforms presented by CS Henry Rotich in his budget speech on June 14.