Insurance regulator shuts down 70 firms, citing lack of permits

Thursday February 25 2016

Insurance Regulatory Authority CEO Sammy Makove at a past event. FILE PHOTO | DIANA NGILA

Insurance Regulatory Authority CEO Sammy Makove at a past event. FILE PHOTO | DIANA NGILA | NATION MEDIA GROUP  

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Stung by rising incidents of fraud, the Insurance Regulatory Authority (IRA) has ordered 70 firms in the sector to halt operations immediately.

In a gazette notice posted Wednesday, authority chief executive, Mr Sammy Makove, said 44 investigating firms, six brokers, 12 insurance motor assessors, one risk insurance management firm, four surveying companies, two loss assessors and an insurance claims settling agency had “failed to secure registration.”

He said none of the companies should receive or handle new business as they are not qualified to do so unless cleared by the regulator.

Mr Makove said all old cases pending before the firms or new cases must be handled by other licensed companies, since the affected entities have no authority to “carry on, transact, do, or handle any new or old business.”

The IRA boss said the order took effect from January 31, adding that affected firms had since been notified.

Rendered null

This now means a number of claims worth billions of shillings could be rendered null or that it will take longer to process others, given the number of cases that the affected firms were handling.

Motorists who had filed claims for motor vehicle damage and accident victims will now have to wait longer since the processes must be conducted afresh by qualified companies.

IRA did not give reasons behind the move believed to have been taken to address complaints raised by insurance companies that some service providers collude with accident victims, especially motorists to file exaggerated claims and others for non-existent vehicles.

The issue comes hot on the heels of rising complaints by providers that fraudulent claims had tripled, bleeding them dry.

Insurance executives blamed investigators and assessors for working in cahoots with unscrupulous people to lodge exaggerated demands, multiple claims for the same incident with different insurance companies and others for non-existent cars.

Clearing portal

The issue saw many insurers call for the fast-tracking of a web-based insurance clearing house portal by the Association of Kenya Insurers, where all covered motor vehicles will be listed and claims vetted before payment is done to arrest the worrying trend.