Insurance cheats face bigger fines in future
What you need to know:
- Sector seeks to regain consumer confidence.
- Regulator wants providers who give false promises to clients during sale of products punished severely.
Insurers who misrepresent and deceive policy buyers while selling products could face higher fines in future if new laws on customer protection are adopted.
Offenders are currently fined Sh5,000, which was set in 1980s, but the Insurance Regulatory Authority said it needs to be enhanced to protect the reputation of the sector that has been struggling to gain the confidence of the public.
“We are seeking to adopt a system where depending on the pricing, the fines automatically increase on year-to-year basis to ensure the penalty reflects the offence. This will ensure we do not change the law very often,” said Insurance Regulatory Authority’s legal officer, Mr Mathews Odero.
He spoke during a media workshop on the trends in the insurance industry held in Naivasha last week.
In Kenya’s cut-throat competition for clients among the 48 companies, there have been complaints of miss-selling, and use of deceptive information or concealment of material facts that end up disadvantaging policyholders.
According to the current law, a person who by an advertisement, statement, promise or forecast which he knows to be misleading, false and deceptive, or dishonest concealment of material facts, or by reckless making dishonestly or otherwise induces or attempts to induce another to enter a contract, transaction or arrangement with a member of insurance industry using deceptive ways, is liable to a fine not exceeding Sh5,000.
The deception is perpetuated through false advertisement, promise or forecast which is misleading mostly carried out by insurance agents who are paid commissions based on volumes of sales.
POOR IMAGE
Insurance sector has suffered poor image as a result of past miss-selling of products by agents.
The regulator has, however, been putting in place rules to guide the selling, including standardising the language used in policy documents or the fine print.
IRA has also demanded that insurance agents undergo training to ensure they understand better the products they offer to avoid inadvertent misleading of potential policy buyers.
