Steve Oke Chapchap MarketSeptember 8, 2019No Comments
CHANGES AFFECTING THE INSURANCE INDUSTRY CONTAINED IN THE INSURANCE
(AMENDMENT) ACT NO. 11 of 2019
Issue Budget Change Implication Effective Issue Budget Change Implication Effective
PROPOSED CHANGES TO THE INSURANCE ACT, CHAPTER 487 OF THE LAWS OF KENYA AS Advance
(d) Any director, officer of the inter- This amendment is meant Effective date:
CONTAINED IN THE INSURANCE(AMENDMENT) ACT No. 11 of 2019
Payment of mediary who contravenes the to enhance prompt payment 23rd July 2019 premium provision of this section commits an of premiums to underwriters
Definitions The Insurance Act is amended in Section These amendments are Effective date: offence; while eliminating the peren2 by defining the terms “Index-based meant to allow for the 23rd July 2019
(e) An insurer shall pay the intermedi- nial problem of outstanding insurance” and “Microinsurance” issuing of regulations on ary an insurance commission within premium.
index-based insurance and 30 days of receipt of the premium; microinsurance business.
(f) Any insurance who fails to pay the The Insurance Act is amended in section This amendment is meant intermediary a commission is liable 2 in the definition of “insurance business” to allow for the regulation of to a penalty of five million shillings.
by inserting the following new paragraphs microinsurance business and Service of Notice The Insurance Act is amended in Section This amendment is meant Effective date: immediately after paragraph
(d) — social insurance business. by Policyholders 199 by inserting the words “or email or to allow for notice required 23rd July 2019
(e) micro-insurance business; other electronic mode “immediately after to be sent to a policyholder
(f) social insurance schemes. the word “post”. under the Act to be sent
Group-wide The Insurance Act is amended by insert- This amendment is meant Effective date: through an email or other
Supervision ing a new section 5A to empower the to enhance group-wide 23rd July 2019 electronic mode in addition Commissioner of Insurance to direct any supervision of the insurance to the use of post. member of the Insurance group to provide groups for the interest of Settlement of The Insurance Act is amended in section This amendment is meant Effective date: any information necessary for effective policyholders. Claims 203 by inserting a new subsection (1A) to to exempt the settlement of 23rd July 2019
group wide supervision. provide as follows: claims in respect to index
Harmonization The Insurance Act is amended in Section This amendment is meant Effective date: “(1A) Subsection (1) shall not apply to the based insurance or microinof the power of 17 subsection (2) by deleting the words to harmonize the power of 23rd July 2019 settlement of index-based insurance or surance from the provisions
the Minister “with the approval of the Minister”. the Minister and that of the micro-insurance claims.” on settlement of claims as
Commissioner and allows set out in in the section 203. the Commissioner to act Power of the Au- The Insurance Act is amended by inserting This amendment is meant Effective date: directly on investigation thority to settle a new section 204A to empower the to empower the Commis- 23rd July 2019
reports. disputes Commissioner to settle any dispute from sioner to settle disputes with
The Insurance Act is amended in Section This amendment is meant any complaint lodged in writing by an finality.
31(1) by deleting the words “and shall to harmonize the power of insurance customer and where one is not notify the Cabinet Secretary accordingly” the Minister and that of the satisfied with the decision of the Commisappearing immediately after the words Board in respect of registra- sioner such a person has a right to appeal “insurance as it may direct”. tion of insurers. to the Insurance Appeals Tribunal.
The Insurance Act is amended in Section This amendment is meant Offences of The Insurance Act is amended by inserting This amendment is meant Effective date: 34 by deleting the words “Cabinet Secre- to harmonize the power of Insurance Fraud a new section 204B to define the offence to deal with insurance fraud 23rd July 2019 tary” and substituting therefor the word the Minister and that of the of insurance fraud and stipulate the pun- which is not defined in the
“Board”. Board in respect to registra- ishment for committing such an offence. penal code. tion of insurers.
The Insurance Act is amended in Section This amendment is meant 39 by deleting the word “Cabinet Secre- to harmonize the power of tary” wherever it appears and substituting the Minister and that of the therefor with the word “Authority”. Authority in respect to return
of deposit for insurers who have ceased to carry out business in Kenya.
Electronic The Insurance Act is amended in Section This amendment is meant to Effective date: delivery of policy 87(2) by inserting the words “ or email allow the delivery of policy 23rd July 2019 documents or other electronic or telecommunication documents by email or other mode” immediately after the words “by electronic or telecommunipost”. cation mode.
Removal of The Insurance Act is amended in Section This amendment removes Effective date: requirement of 106(3) by deleting the words appearing the requirement to publicise 23rd July 2019
Gazettement of after the word “shillings” and substituting lost policies in the Kenya Lost policies therefor the words “require the policy- Gazette and at least one holder or beneficiary to swear an affidavit newspaper of wide circuregarding the loss of the original policy”. lation and substitutes that
with the requirement for an affidavit.
Transfer of Insur- The Insurance Act is amended in section This amendment is meant Effective date:
ance Business 113 (1) by deleting the words “at least to remove the option of 23rd July 2019
one of whom is” appearing in (a) (b) transferring insurance busi-
ness to an insurer that is not registered under the Act.
Advance The Insurance Act is amended by deleting This amendment is meant Effective date: Payment of section 156 and replacing with a new to enhance prompt payment 23rd July 2019 premium section 156 providing that: of premiums to underwriters
(a) No insurer shall assume a risk in while eliminating the perenKenya in respect of insurance busi- nial problem of outstanding ness unless and until the premium premium.
payable thereon is received by the insurer.
(b) No insurance intermediary shall receive premium on behalf of the insurer;
(c) Any contravention by the intermedi-
ary shall attract a penalty of 20% of the outstanding premium;
REGULATIONS UNDER THE INSURANCE ACT & INSURANCE
(MOTOR VEHICLE THIRD PARTY RISKS) ACT
L.N. 91 of 2019 The Insurance (Policyholders Compensa- This amendment is meant Effective date:
The Insurance tions Fund) Regulations, 2010 is amended to remove insolvency of the 17th June 2019
(policyholders by deleting regulations 11. insurer as the condition for
Compensation the Board of Trustees to Funds) (Amend- provide compensation to the ment) Regula- claimants. tions, 2019
L.N. 92 of 2019 Rule 3 of the Insurance (Motor Vehicles This amendment is to clas- Effective date:
The Insurance Third Party Risks) (Certificate of Insurance) sify as PSV the motor cycles 17th June 2019
(Motor Vehicle Rules, 1999, is amended in paragraph (1) used by fare paying passenThird Party Risks) by inserting the words “and motorcycle gers (boda bodas) and the (Certificate and three-wheelers used by fare-paying Three-wheelers (tuk tuk).
of Insurance) customers” immediately after the words (Amendment) “self drive vehicles” appearing in paraRules, 2019 graph (a).
L.N. 93 of 2019 The Insurance principal regulations is This is to align the reg- Effective date:
Insurance amended by deleting regulation 8 on ulations with the use of 17th June 2019
(Amendment) admitted assets and liabilities. the term “total assets and
Regulations, liabilities” to replace the
2019 concept of “admitted assets
and liabilities” as introduced by Insurance “Amendment” Act, No. 50 of 2016
The Insurance Principal regulations is These amendments define amended in Regulations 9 by deleting and the new classes of longsubstituting a new sub-regulation (2) to term insurance business as introduce definition of the terms “annuity”, introduced by the L.N 108 “deposit administration”, “group credit of 2016.
insurance”, “permanent health insurance”, “personal pension”, “unit link and linked investments”
The Principal regulations is amended in This is to align the regregulations 17 by delating paragraph (a) ulations with the use of the term “total assets and liabilities” to replace the concept of “admitted assets and liabilities” as introduced by Insurance “Amendment” Act, No. 50 of 2016.
Commissioner of Insurance & Chief Executive Officer Insurance Regulatory Authority