The recently released insurance industry performance statistics for quarter 2020 by the Insurance Regulatory Authority (IRA) show a disturbing downward trend.
There are several factors that precipitated this, including a lack of commitment by the regulator to deliberately steer the industry towards growth by encouraging and working with industry associations to stimulate growth.
The impasse created deliberately by the regulator and its hardline stance not to recognise associations and have them anchored in law will continue to create a losing battle for insurance growth even as they spend taxpayers’ money on futile exercises.
Fraud continues to be abetted and every conman has found easy prey in insurance clients who are conned day and night by supposed “insurance agents”. This is an issue that can be addressed by associations regulating discipline among their members and looking at their professionalism. But the regulator needs someone to blame so they will not empower associations to bring sanity into the sector.
There’s also an unhealthy competition that has been encouraged between the various associations in the industry by the regulator whereby nothing is done to encourage them to work together for the betterment of the industry and most importantly the policy holders.
Maybe the question would be, where are these games being played by the regulator?
We all know that unity is strength and that when people come together they can build a Tower of Babel towering into the clouds. That would not be for anyone’s good especially for those who feel threatened by that kind of unity. We know that a strong agents and brokers body can move policy and literally hold the industry at ransom.
But that has not been proven and the fear is only of shadows and the guilty being afraid. When associations are not included in policy decision making on behalf of the industry then all other attempts will fall flat on the face and the industry will not grow.
The post-Coronavirus disease era will not be good for the economy and especially the insurance sector. The economy has taken a beating and premiums are not being paid leading to lapsing of policies. Vehicles are not being imported therefore motor insurance premiums are being lost.
Premiums from travel insurance are not being realised because airlines have been grounded…the situation can only get worse. But coupled with all that is the moribund laws being made in the insurance sector deliberately crippling insurance intermediaries. The recent passing of the Tax Laws (Amendment) Act 2020, ostensibly to take care of the small man, was anything but.
Value Added Tax (VAT) was introduced for insurance intermediaries, leading to them being the most taxed group in Kenya since they are paying withholding tax and income tax at the same time.
No one bothers to find out the stakeholders’ views on these laws and the regulator needs to be held accountable for these developments because they are advisors of government on matters insurance. The result will be complete death of the insurance industry unless some of these laws are rescinded.
Intermediaries are already looking for better things to do because the effort of their labour is not being recognised. But that seems to be the intention of the government because it seems the only group left to do insurance in Kenya will be the banks.
We should remember that a law was passed last year, despite evidence to the contrary, that insurance cannot be done by intermediaries without them touching their clients’ monies in facilitation of paying their premiums.
Thankfully, the courts saw our view because as of today half of the agents practising insurance would be at home. But introduction of more laws to suppress intermediaries in this country worries us because we now believe it is a well orchestrated move to get rid of the over 10,200 intermediaries in this country despite the government paying lip service to employment creation.
Banks as mentioned earlier will be the beneficiaries of all the billions in premiums generated over the years’ by insurance intermediaries once we all go home because they have evolved into a different entity in insurance, where they are not classified as agents or brokers.
We also all know the owners of banks in this country are politically connected individuals who only think about their bottom lines. By not thinking about the future of insurance in this country, we are killing our economy because an economy without a strong and robust insurance sector will just be mark-timing and no meaningful growth will ever be experienced.
A question arises, why are we shooting ourselves in the foot?
Washington Ndegea, chairman, Bima Intermediaries Association of Kenya.
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