The number of complaints against insurance companies in Kenya increased in the third quarter of 2021, latest industry data shows, amid a public uproar over non-payment of claims.
The Insurance Regulatory Authority (IRA) has penalised several firms for breaching contracts and failing to comply with the industry’s regulations, mainly on settlement of claims and accounting standards.
Complaints rose to 467 in quarter three of 2021, up from 459 in the second quarter according to the IRA insurance industry report for the period January – September 2021.
The authority registered a total of 1,637 complaints in 2020, it notes in its annual 2020 report, with general business insurance accounting for 75 per cent of the complaints, whereas 25 per cent were made against long-term insurers.
General insurance is basically non-life insurance policies, which include automobile (motor vehicles) and homeowners policies.
Long-term covers life insurance policies.
“Complaints comprised of delayed settlement, declined claims, erroneous deductions and unsatisfactory offers or compensation,” IRA says in its latest report.
There has been public concern over failure by underwriters to pay out claims and increased complaints against insurance companies from motor vehicles garages and loss assessors for delayed payments.
The regulator has since penalised eight insurers a total of Sh17.7 million.
They include Invesco Assurance Company Limited, which was fined Sh7.9 million for non- compliance with section 203 on payment of claims.
Resolution Insurance, which a section of the public has raised concerns over rejection of its medical cover by a number of hospitals, has been fined Sh3.2 million for non-compliance with section 197A on premium levy payment.
Keninidia Assurance has been penalized Sh1.1 million for non-compliance with payment of claims,
KUSCCO Mutual Assurance Limited (Sh161,739 ) for non-compliance on payment of claims while Metropolitan Cannon Life Assurance has been penalized Sh1.3 million for non-compliance with Section 61 of the Insurance Act on submission of audited accounts and statements.
Takaful Insurance of Africa has also been asked to pay a penalty of Sh330,000 for non-compliance with submission of unaudited accounts and statements while Kenyan Alliance Insurance Company will pay Sh51,547 ) for non-compliance in claims payment.
Trident Insurance Company Limited has been fined Sh3 million non-compliance with section 54 and 197A on submission of unaudited accounts and statements and premium levy payment.
Xplico Insurance Company, which together with Amaco were early this year put on the spot over liability issues and increasing customer complaints, has been Sh510,000 for non-compliance with section 197A on premium levy payment.
Meanwhile, IRA has also written to three general insurance companies for continued non-compliance with reinsurance arrangement while two companies have been issued letters charging penalties for non-compliance with submission of statutory returns.
Thirteen insurance companies have been notified for non-compliance capital adequacy requirement while, three general insurance companies for non-compliance on deposit with Central Bank of Kenya while three others have not complied with assets rules.
“The authority wrote to one general insurance company for non-compliance with Section 179 and 197 of the Insurance Act in respect to require payment of a monthly contribution to the Policyholders Compensation Fund and insurance premium levy,” the Godfrey Kiptum led regulator says.
There were 56 licensed insurance companies in Kenya but this week’s entry by Equity Group (Equity Life Assurance ) takes the number to 57.
In the year 2020, 791 (65%) complaints against general insurers were resolved while 402 (98%) complaints against long-term insurers were resolved.
The value of total claims and policyholders’ benefits increased to Sh61.5 billion in Q3 of 2021, compared to Sh48.4 billion, IRA data shows.
“The high premium volume classes of general insurance business contributed the largest proportions of incurred claims; medical (38.1%), motor private (29.2%) and motor commercial (23.1%),” IRA notes.
Insurance is among sectors impacted by the Covid-19 pandemic especially in premium written and investment.
“Covid-19 impacted the insurance sector mainly through reduced returns from the capital markets, premium reduction as well as increase in insurance claims in some classes of insurance business,” Kiptum notes.
Insurance penetration, which is the ratio of gross direct insurance premiums to GDP, declined to 2.17 per cent in 2020 from 2.34 per cent in 2019.