Insurance brokers and corporate agents want some of the proposed provisions in the Draft Insurance Bill, 2014 and Draft Insurance Regulations, 2015 rescinded saying they have the potential of driving many of them out of business.
BIMA Intermediaries Association of Kenya chairman, Mr Washington Ndegea Wednesday said some of the proposed issues include the requirement that an insurance broker raise Sh5 million to be allowed to operate, and the reduction in the years for earning commission from long term products from ten to 6 and agents being restricted to representing only one company as being oppressive.
“How many brokers can raise Sh5 million. This amount can only be raised by banks. Is this a way of favouring the banks that have recently entered in selling of insurance products?”
Insurance brokers are required to raise a premium guarantee of Sh3m currently.
He said these proposals, if not reversed, have the potential of kicking out the agents from the insurance industry.
Experts in the insurance industry have indicated that banks will increasingly take up lead positions in the distribution of insurance products, edging out traditional agents who have sustained the industry over the years and contributing over 70 per cent of premiums.
GO TO BANKS
“We expect that when the top distributors of insurance products are announced this year, the top five positions will go to banks. Like in South Africa, banks will be the largest intermediaries in insurance industry,” said Resolution Insurance MD Peter Nduati in an earlier interview this year.
Some of the top distributors are Equity, Barclays, Chase and Standard Chartered banks.
Mr Ndegea however said the insurance agents will still have a place in the insurance industry as many of the buyers of insurance products preferred face-to-face interaction with them to have confidence about the products.
He said several agents had lost clients to the banks even after Insurance Regulatory Authority issued guidelines for bancassurance (selling insurance through banks) as they had not been adhered, to adding that they were asking for fair playing ground in the market.
“The banks have been forcing some of the clients who seek loans from them to transfer all their requirements including insurance to them. This has left the agents will lower income,” he said.
The matter is causing concern among insurance corporate agents who have organised themselves to ward off competition and re-orient themselves to new market realities. The sector is increasingly adopting new channels to deliver products using mobile and internet platforms.