Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

Kenya

Michuki acts tough on insurance firms

NAIROBI, November 21 – Acting Finance Minister John Michuki on Friday directed shareholders of insurance companies with over 10 per cent equity not to be involved in the management to reduce incidences of fraud.

Speaking during an insurance conference, Mr Michuki stated that this would reduce conflict of interests especially during the appointment of directors.

“Insurance companies hold huge amounts of public funds on trust. However, some industry managers have failed the test of trust and have badly managed those funds leading to the collapse of insurance companies and brokers,” he explained.

He further pointed out that 40 per cent of claims paid out by Public Service Vehicle underwriters were considered fraudulent.

He stressed the need to minimise such cases of fraud.

“This cannot be allowed to continue. Of particular concern is the case of owner managed companies where there is no clear distinction between ownership and control,” he emphasised.

The insurance industry contributed 2.6 per cent of gross domestic product (GDP) last year.

The Finance Minister said that even though gross direct premiums grew by about 15 percent over the same period, the industry’s contribution to GDP growth in relation to other sectors within the financial services had been below expectation.

He pointed out that the industry had a huge potential for growth which was yet to be exploited.

“As at December 31, 2007 the number of persons covered under individual life policies were slightly above 400, 000 representing a mere 1.1 percent of the population.”

Advertisement. Scroll to continue reading.

The number of Kenyans covered by group life insurance schemes was approximately 500,000 while people who were covered by some form of medical insurance was also half a million.

Mr Michuki said the statistics were vital as they clearly indicated the presence of a huge unexploited market for the insurance industry.

At the same time, the Insurance Institute of Kenya Director James Muiruri welcomed the move and said that it would streamline the insurance industry.

“If a shareholder owns at least 10 per cent of the company, they will not be allowed to be managers at the same time,” Mr Muiruri said.

He further stressed the need of separating ownership from management.

Mr Muiruri pointed out that the formation of a task force by the Ministry of Transport and the regulatory authority would ensure better management of the public transport sector.

“Insurance companies together with brokers will have to come together and maintain a single database so that it will not matter whether a driver or a car owner has insured their vehicle in Bungoma,” Mr Muiruri explained.

“If they do something wrong in Bungoma, and somebody taps into the database, we should be able to see that driver is not a good driver,” he stated.

Advertisement. Scroll to continue reading.
Click to comment

Trending

Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...