This archive report was first published on 19 June 2020.
Insurance Sector Faces Uncertain Future ¶
June 19, 2020
The insurance industry in Kenya is facing a bleak future, with the post-Coronavirus disease era expected to be particularly challenging. According to the Insurance Regulatory Authority (IRA), the industry's performance statistics for quarter 2020 show a disturbing downward trend.
Several factors have contributed to this decline, including a lack of commitment by the regulator to encourage industry growth. The regulator's hardline stance against recognizing industry associations has created an impasse, hindering the sector's progress.
Another issue plaguing the industry is fraud, which has been abetted by the lack of regulation among insurance agents. This has led to many clients being conned by supposed 'insurance agents', further eroding trust in the sector.
Unhealthy competition between industry associations has also been encouraged by the regulator, rather than promoting unity and cooperation among stakeholders. This has resulted in a losing battle for insurance growth, despite the regulator's efforts.
The recent passing of the Tax Laws (Amendment) Act 2020 has also had a devastating impact on the industry. The introduction of Value Added Tax (VAT) for insurance intermediaries has led to them being the most taxed group in Kenya, with many struggling to stay afloat.
Intermediaries are already looking for alternative careers, as the effort of their labor is not being recognized. The government's intention to suppress intermediaries and allow banks to dominate the industry is a worrying trend, with many fearing the complete death of the insurance industry.
Washington Ndegea, chairman of the Bima Intermediaries Association of Kenya, has expressed concerns about the government's actions, stating that the move is a well-orchestrated attempt to get rid of the over 10,200 intermediaries in the country.
