The insurance regulator fined 17 insurers and 15 brokers Sh31.75 million in the financial year ended December 2023 as late claims payments continue to plague the sector, which collects billions of shillings from customers with a promise to compensate them in case of losses.
The latest Insurance Regulatory Authority (IRA) data shows the figure represents a drop from a record Sh94.85 million fines that the regulator imposed on 20 insurers in the preceding financial year.
While the value of fines receded for the first time in three years, the number of insurers and brokers in breach remained high, suggesting that the number of inconvenienced customers remains high. The regulator had in 2021 penalised 10 insurers Sh56.9 billion, which was a growth from Sh17.6 million in 2020 and Sh2.7 million in 2019.
IRA fines on insurers and brokers story
IRA's latest annual report shows the breaches included failing to pay claims to customers, late payment of annual licensing fees, and late submission of financial performance records, leaving the regulator in the dark over the stability of some of the insurers and the safety of customers’ covers.
Breaches by the 17 insurers represent a third of the 52 long-term and short-term insurers that were operating in the market in the review period. The persistently high number of insurers in breach is a worry to millions of customers in an environment where complaints over delayed or unpaid claims have been mounting.
The fines came in the period customers’ complaints against insurers rose for the fourth straight year to 1,962, surpassing the previous year’s 1,878 as delayed settlement of claims took up more than half (53.3 percent) of the complaints, followed by a refusal to pay claims (18.9 percent).
Invesco Insurance, which has been using court orders to swing between liquidation status and a full-functioning insurer, was hit with the heaviest fine (Sh16.18 million), remaining on the regulator’s list of shame owing to failure to submit audited reports and settle claims on time. It had been fined Sh31.26 million a year earlier.
According to the law, an insurer should admit or deny liability, determine the amount, identify the claimant, and pay within 90 days. A company can request a 30-day extension and fail to pay within the set deadlines but attract a five percent penalty on the unpaid amount.
Invesco was followed by Trident Insurance Company Limited, which was fined Sh8.96 million. The insurer had in the previous year suffered the heaviest fine of Sh48.86 million over eight breaches, including delays in claims payment and failure to prepare books of accounts.
The Kenyan Alliance Insurance Company was fined Sh596,826, Xplico Insurance Company Limited was hit with a Sh429,117 fine and First Assurance Company was fined Sh376,156.
Liberty Life Assurance was penalised Sh286,750 in the period, Pacis Insurance was fined Sh280,000, while Corporate Insurance and Pioneer General were fined Sh266,101 and Sh210,444, respectively. AAR Insurance was fined Sh200,990.
Star Discovery Micro Insurance, Kuscco Mutual Assurance, Madison Life Assurance, Mayfair Insurance, and Monarch Insurance Company were each fined Sh200,000. Absa Life Assurance and Kenya Orient were fined Sh70,418 and 4,213, respectively.
Among the brokers, the highest fines went to Niconat Insurance Brokers (Sh398,000), Victoria Insurance Brokers (Sh350,000), Bilmax Insurance Brokers (Sh330,000), Crescent Insurance Brokers (Sh315,000), while Scoreline Insurance Brokers and Paladin Insurance Brokers were fined Sh301,000 each.
