Market Information
Bancassurance companies fall 70pc on strict guidelines
Friday August 12 2022
Insurance coverage Regulatory Authority CEO Godfrey Kiptum. FILE PHOTO | NMG
The variety of banks promoting insurance coverage merchandise has declined 70 % to eight lenders following regulatory reforms within the sector.
Newest Insurance coverage Regulatory Authority (IRA) information exhibits the variety of lenders providing insurance coverage fell from 27 in 2021.
Now solely ABSA, DTB, Faulu, KCB, Rafiki, Sidian, Stanbic, and U&I are listed as licensed as bancassurance companies.
The sharp decline comes because the regulator launched new guidelines within the sector requiring bancassurance firms to extend minimal capital to Sh5 million which is larger than what’s required of brokers (Sh1 million) and raised registration charges from Sh1,000 to Sh20,000.
The bancassurance companies should additionally present a Sh10 million financial institution assure or a authorities bond.
IRA additionally directed that the lenders should personal one hundred pc of the bancassurance brokers, receive collaboration agreements with insurance coverage firms and prominently show the title of the underwriters in any promoting characteristic.
The principal officer working the company for the banks now has to cross a match and correct take a look at and have to be technically certified in insurance coverage, actuarial, accounting and banking.
The regulator says a few of the lenders haven’t complied with the brand new guidelines and whereas they’ve solely revealed the eight who’re absolutely compliant, by final week they had been within the technique of approving 19 lenders.
“It’s linked to the regulatory modifications. By final week we had about 19 companies within the technique of compliance,” mentioned IRA chief government officer Godfrey Kiptum.
Since 2004 when the Central Financial institution of Kenya granted the Industrial Financial institution of Africa (now NCBA) license to function bancassurance enterprise, the sector has attracted extra banks and microfinance gamers.
These included Fairness, KCB, NBK, Barclays Financial institution, CBA, Stanbic, Normal Chartered, Jamii Bora, Cbl, Chase, Co-Op consultancy, Credit score Financial institution, Diamond Belief Financial institution (DTB), Eco, Household, Faulu, HF, I&M, Kwft, Letshego, Miasha, Parabank, Rafiki, SMEP, U&I, Unaitas and Sidian.
Fairness Financial institution was additionally beforehand an insurance coverage agent however has since ventured into the insurance coverage enterprise rolling out a life coverage enterprise.
The brand new laws will now restrict a bancassurance firm to hunt approvals earlier than promoting any merchandise to their clients.
They won’t be allowed to deduct premiums from their buyer accounts with out prior written consent.
Earlier than promoting insurance coverage the bancassurance brokers should in writing inform you’ll be able to choose your personal underwriter and mustn’t advise or coerce you to cancel an current coverage. They need to additionally not cease you from on the lookout for a bancassurance firm of your selection or selecting to deal instantly with the insurance coverage agency.
They need to additionally make sure the confidentiality of buyer information and handle complaints promptly.
[email protected]