Insurance brokers are lobbying to have the wording of a clause in the Insurance Amendment Bill changed.
Clause 156 subsection ( 2 ) says an intermediary shall not receive any premiums on behalf of an insurer and subsection ( 3 ) says an intermediary who contravenes subsection ( 2 ) shall be liable to a penalty of Sh1 million on each contravention, payable to the Policy Holders Compensation Fund.
Association of Insurance Brokers of Kenya chairman Nelson Omolo said the majority of insurance brokers would lose their jobs if the bill becomes law.
“It proposes that brokers should not handle premium payments of clients, but pay directly to the insurer. That means I’m throwing away the client and it remains upon the benevolence of the client to come back,” Omolo said.
Losing clients
“My role will be confined to just asking for my commission after I have sent client to an insurer.” Omolo spoke on the sidelines of the AIBK regional conference in Mombasa.
“The majority of our members will close down because it is not just about handling premiums; it is about losing the client entirely. Once you’ve told them that you are not handling their premium, go pay directly to the insurance company, chances are that client will not come back,” Omolo said.
He said as a fraternity, AIBK are proposing that the wording of the clause be changed to read that a broker will receive premiums and must remit to the insurer all the premiums payment within a certain period of time.
“We shall lobby that law to change and if is not changed, we will be moving to court to stop its implementation,” said Omolo.
At the same time, Omolo said that insurance penetration is Kenya has remained relatively low at about three per cent because of the outdated model agents have been using to reach out to the clients.
“These agents are not well trained to tackle the kind of clientele that we have today, they have been using an old model that was used in the 1970s. However, we are now training the agents,” he said. He said they envision to see insurance penetration hit six per cent within the next two years.