30 April 2008
editorial
Nairobi — The official inauguration of the Insurance Regulatory Authority (IRA), which takes place Wednesday, should have happened years ago.
Year in year out, players in the critical financial sector have urged the authorities to come up with a regulator. But the Government was not, until last year, convinced by the entreaties.
Consequently, the insurance industry remained poorly regulated under the Commissioner of Insurance, a toothless department at the Treasury. Inevitably, the general underwriters have stumbled, one after the other, with no one around to take early corrective measures.
This has meant that public service vehicles have been operating with what amounts to an excuse for insurance, as a good number of underwriters are just hanging by a thread.
On Wednesday, Finance minister Amos Kimunya is officially launching the authority. We expect it to hit the ground running by establishing a competent bureaucracy to audit the industry. It must weed out weak players by enhancing the entry level and capitalisation.
However, we caution the IRA not to approach the industry with the old-style control mentality. It must swiftly facilitate the introduction of modern insurance products by making the relevant recommendations to the Treasury, beginning with the next Budget.
In the same spirit, it must root for the crafting of a single financial industry authority to eliminate the hurdles that impair growth in the sector.
The Insurance, Banking, Capital Markets Authority and Income Tax Acts must all work in harmony for the financial sector to carry along the economy.
Unless this happens, most of the commendable legislation enacted in the past eight years will have been in vain.
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