Saturday, July 6, 2019

Insurance (Amendment) Act, 2018 Signed into Law

On 5th July 2018, President Uhuru Kenyatta officially signed the Insurance (Amendment) Bill, 2018. This is a major development for the industry with regard to payment of premiums and addressing insurance fraud. Some of the major highlights are noted below.

Section 156 was repealed and replaced with the following:

156. (1) No insurer shall assume a risk in Kenya in respect of insurance business unless and until the premium payable thereon is received by the insurer.
(2) An intermediary shall not receive any premiums on behalf of an insurer.
(3) An intermediary who contravenes subsection (2) shall be liable to a penalty of one million shillings on each contravention, payable to the Policy Holders Compensation fund.
(4) Any officer or director of an intermediary who contravenes subsection (2) shall be guilty of an offence, and upon conviction shall be liable to a fine not exceeding one hundred thousand shillings or to an imprisonment term of three months, or to both.
(5) An insurer shall pay an intermediary insurance commission due within thirty days upon receipt of premium.
(6) An insurer who contravenes subsection (5) shall be liable to a penalty of five million shillings on each contravention, payable to the Policyholders Compensation Fund.

The act also introduced 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. The amendment further ensures that the Act complies with International Association of Insurance Supervisors (IAIS) standards on countering insurance fraud.