Ruto assents Insurance Amendment Bill to strengthen company accountability

President William Ruto on Thursday assented to the Insurance amendment bill, 2023.

The Bill, sponsored by Kikuyu MP who doubles up as the majority leader Kimani Ichung’wah was passed by parliament on October 25.

It seeks to enhance accountability within insurance companies and observance of fiduciary duties as well as professional responsibilities by senior managers.

The Insurance Act (Cap.487) has been amended to provide for offences and penalties relating to the management of insurance companies.

The Act will see changes in the management of insurance claims by ensuring that a director, principal officer, or management staff of an insurer who fails, without lawful justification, to settle a judgment or any claim commits an offence under the Insurance Act.

"The penalty for this offence is set at a maximum of Sh5 million for an individual and a maximum of Sh10 million in the case of a company," it states.

Previously, this was the responsibility of a claimant to file a civil suit to enforce a judgement or claim.

It will ensure that insurance company managers are more accountable for losses arising from their companies thus instilling a greater sense of prudent risk management.

The Act also stipulates the offences by a director, principal officer, or management staff of an insurer.

It includes failure to take all reasonable steps to secure the compliance of a registered or licensed person with the Act and failure, without lawful justification to settle a judgement or any claim.

Failure to take all reasonable steps to secure the accuracy and correctness of any statement or report submitted under the Act or any other applicable written law also constitutes an offence under this Act.

They will also be mandated to supply any information required or effect any directive issued under the Act.

"Taking or converting any property of the insurer to his or her personal or associate’s use or gain, including, inter alia, receiving the insurer’s property and failing to remit or reasonably account to the insurer; or dealing with the property of an insurer in such a manner that it cannot be returned in the condition in which it was at the time of the taking or conversion," it further states.