Soon, some Kenyan banks might not be able to offer insurance products until they pay off all of the outstanding premiums from their bancassurance efforts.
The Insurance Regulatory Authority (IRA) orders banks and microfinance institutions to remit these uncollected premiums, failing which they risk having their licenses to provide bancassurance services revoked.
Many financial institutions are allegedly holding onto premiums that their clients have paid, leaving them exposed to risks because insurers aren’t receiving the funds necessary to pay claims.
Over the last five years, the amount of outstanding insurance premiums has rapidly increased, and projections indicate that they will reach Ksh 45.25 billion in 2022, up from Ksh 35.73 billion in 2019.
This situation has hampered insurers’ ability to pay claims, which has affected their liquidity.
In light of the fact that their licences will expire at the end of the year, the IRA has instructed bancassurance providers to settle any outstanding amounts by the end of December.
