- Kenya’s Treasury Cabinet Secretary Njuguna Ndung’u has warned insurers to pay up on delayed claims or simply close shop.
- In his speech at the ongoing 8th Eastern and Southern Africa Regional conference on inclusive insurance, Prof Ndung’u said insurers, who consistently fail to meet the set standards for good business practice should exit the stage.
- The minister said the unfortunate tag of delayed or non-payment of claims often weighs down the insurance companies that have a good reputation of timely payment of claims.
Kenya’s Treasury Cabinet Secretary Prof Njuguna Ndung’u has fired a warning shot to insurance companies that for varied reasons delay the payment of customer claims, asking them to instead simply close shop.
Dr Ndung’u said the unfortunate reputation tag of delayed or non-payment of claims often overshadows the insurance companies that have a good reputation of timely payment of claims.
“I would like to reiterate that insurance companies are in the business of mitigating risks by paying claims. This has to be done in a timely manner! By doing this, the companies cultivate stronger relationships with their customers and thereby securing a license to operate. This leads to their sustained growth while creating a financial and societal value at the same time. Doing business means adding value but what kind of value and for whom exactly?” his speech read by Principal Administrative Secretary Treasury Samson Wangusi at the ongoing 8th Eastern and Southern Africa Regional conference on inclusive insurance noted.
“Businesses are under pressure to compete in the marketplace, striving to identify market opportunities and develop solid business ideas. Stakeholder management, therefore, has to be part of good corporate governance. Company’s genuine commitment is demonstrated not only by proactively seeking out appropriate partners for engagement, but also by making sincere attempts to understand those stakeholders and implement their concerns into corporate decision-making.”
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“It is worth noting that insincere efforts become obvious and hamper relations between the company and its stakeholders, potentially creating a bigger risk to business continuity in the long run,” he added.
The industry has recently come under heavy criticism for non-compliance to laid out industry regulations and procedures. In addition to diminishing public trust, it has negatively affected the goal of increased insurance. penetration.
“The remedy to most of the disruptive risks we are witnessing lies in compliance. This will not only improve our efficiency but help us navigate our constantly changing business environment. As we deliberate on how to enhance insurance inclusion, we need to be careful to ensure that the same is done within acceptable legal and regulatory frameworks. Consumer protection should remain central in our plans,” he noted.
Last year, Insurance Regulatory Authority (IRA) fined nine insurers $130,000 for late payment of claims, failure to submit audited accounts and premium levy payment.
Some of the insurance companies fined included Invesco Insurance $58,000 for delayed payment of claims followed by Kenindia Assurance $7,000, Kuscco $1,200 and Kenya Alliance $375.
Metropolitan Cannon was fined $10,000, Takaful Insurance $2500 and Trident $22, 000 for late audit submissions while Resolution $24,000 and Explico Insurance $3,755 were fined for failure to pay the premium levy.
The IRA’s push to disclose fines on insurance companies that fail to pay customers comes at a time of increasing cases where patients are turned away from hospitals because their providers fail to settle medical bills.
An insurer should admit or deny liability, determine amount, identify the claimant and pay within 90 days according to Kenyan law.
