Work to remove Kenya from FATF grey list, Nyaoga tells insurance brokers

Insurance brokers at the AIBK annual conference in Mombasa on Thursday / BRIAN  OTIENO

Senior counsel Mohamed Nyaoga at the AIBK annual conference in Mombasa on Thursday / BRIAN  OTIENO

Kenya’s status in the Financial Action Task Force grey list can be changed only by improving its cybersecurity, a conference heard on Thursday.

Kenya was placed in the FATF grey list in February last year due to deficiencies in its anti-money laundering and counter-terrorism financing frameworks.

This means the country is under increased monitoring and must work with the FASTF to improve its regime.

This could scare away potential investors if not taken care of.

On Thursday, senior counsel Mohammed Nyaoga said as the industry embraces technology, threats are shifting from physical to digital, requiring enhanced safeguards.

He said insurance brokers need to strategically invest in cybersecurity to curb the risks of money laundering and terrorism financing

“You are the people who can help us exit the FATF grey list,” he told the Association of Insurance Brokers of Kenya (AIBK).

He spoke during the AIBK’s 19^th annual conference in Mombasa.

The four-day conference brings more than 500 insurance practitioners together under the theme, ‘The Future of Insurance: Igniting Innovation, Securing Tomorrow.’

“If clients are to have confidence and trust in a digitally driven system, then we must put in place adequate safeguards to guarantee the safety of the systems that hold their data,” Nyaoga said.

AIBK national chairman John Lagat said the insurance sector is at crossroads as the forces of technology, customer expectation, regulatory change, global risks, and local realities are converging, offering both a challenge and an opportunity.

“In Kenya, the interplay of mobile-money infrastructure, fintech, and insurance is yielding new models of inclusive insurance. Pay-as-you-go, peer-to-peer insurance, micro-insurance, and embedded insurance are being deployed more widely,” Lagat said.

The AIBK chair said insurers are now adopting artificial intelligence, and many are leveraging on data analytics to tailor products to specific geographies, customer segments, and risks.

“Individual companies are stepping up. We have strong examples of Kenyan insurers leveraging data, digital partnerships, and new distribution models. This not only strengthens their businesses but also the ecosystem as a whole,” Lagat said.

Nyaoga said the growing integration of technology in the insurance sector has the potential to enhance efficiency and improve customer satisfaction.

He said over 70 per cent of insurers in the country are accessible through mobile applications, portals, and chatbots, where customers can buy policies, submit and track claims and obtain personalized customer care support from the comfort of their homes.

“This means tasks are performed much faster and at lower costs. This, in turn, leads to improved customer satisfaction,” Nyaoga said.

He said artificial intelligence and machine learning have transformed key aspects of underwriting, risk assessment, and fraud detection.

“Overall, they make it easier to detect fraud more accurately, thereby limiting the exposure that would have resulted from a manual approach,” he explained.

Technology, he said, has led to innovative products to cover new approaches, such as telemedicine and micro-insurance models like daily or weekly payments that have lowered the threshold of access to insurance and consequently supported programs like Universal Health Coverage and promoted financial inclusion.

“For insurance sector players to thrive in this digital ecosystem, there is a need to anticipate the challenges and reconfigure our strategies and approaches,” he said, urging Insurers to retool their boards, management and staff for optimal performance

AIBK chair Lagat, however, noted that the country’s insurance penetration has remained significantly below global averages.

Statistics show penetration levels under three per cent for Kenya, versus global averages of over seven per cent.

“But the good news is that the sector is not static. It is evolving. According to recent industry reports, growth is consistent, and across many listed insurance companies, there is positive net income growth,” he said.

“Moreover, the structural foundations are being laid for sustainable growth with digital channels, data analytics, inclusive models, and regulatory reform.”

He, however, raised concerns about the reporting structures and penalties intended to be imposed on brokers who do not comply with the provisions and demands of the Financial Reporting Centre (FRC).

Insurance Regulatory Authority (IRA) CEO Godfrey Kiptum urged the brokers to lead efforts in ensuring that the country is removed from the grey list.

“It is not a matter of the IRA or Central Bank. It is for the public good. We want to encourage you to ensure you meet the requirements,” he said.

He noted that Kenya in East Africa could be the only remaining country on the grey list.

INSTANT ANALYSIS:

The FATF notes that Kenya has a high-risk profile but cannot demonstrate successful investigations or prosecutions of money laundering or terrorist financing offenses. The FATF also points to an unregulated non-profit sector that poses a risk for terrorism financing.