Insurance firms that have continuously delayed in paying their claims face closure following a new push by the regulators.
Speaking at the 2023 Eastern and Southern Africa Regional Conference on Inclusive Insurance amidst low insurance penetration in the continent, the Insurance Regulatory Authority (IRA) chairman Moses Mabonga warned of tough actions.
The IRA board chair noted that delayed payment of claims is one of the reasons for low uptake of insurance in the country.
“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 if not they should close shop,” said Mabonga.
The statement comes on the wake of increased general insurance claims which rose to Sh72.26 billion in the last quarter of 2022 compared to Sh64 billion in the third quarter.
Earlier in the year the number of firms that had failed to pay their claims rose to three after Invesco Assurance Company joined Concord Insurance Company Limited and Standard Assurance Kenya Limited under liquidation.
Principle Administrative Secretary at the National Treasury, Samson Wangusi, called on the players in the sector to be honour their obligations.
“A 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,” said Wangusi.
The insurance sector stakeholders pointed out that when insincere efforts by insurance firms become obvious it hampers relations between the company and its stakeholders, potentially creating a bigger risk to business continuity in the long run.
The conference brought together representatives from insurance and reinsurance companies, brokers, distribution channels, international organisations, NGOs, development-aid agencies, policymakers, regulators and supervisors in Africa.
