21 December 2012

Kenya: IRA Extends Deadline for New Insurance Rules

THE INSURANCE Regulatory Authority has postponed the implementation of new industry guidelines from January 1 to April to give companies more time to comply.

"The timing of implementation was not feasible. We have therefore moved the deadline to April 1 to give ample time to stakeholders to implement them," said IRA chief executive Sammy Makove.

Under the new rules, all insurance companies must employ an actuary for their operations and seek from them a written approval before terminating a reinsurance contract.

Previously, only firms in long term insurance business like life insurance were required to have actuaries. The new guidelines will also cut the power of CEOs in insurance firms by making the compliance officer, actuary, internal auditor and the risk supervisorreport directly to the board and not to the firm's boss. They will however be allowed to discuss their reports with the CEO.

The guidelines which were developed with the help of international insurance consultant Oliver Reichert are aimed at forestalling collapse of insurance firms due to financial burdens and mismanagement.

CEOs of the insurance firms complained to IRA that there are very few fully qualified actuaries in Kenya and this requirement was therefore almost impossible to implement.

Insurance firms have also sought more time to implement the guidelines to give them time to plan their finances effectively. The companies feel that the new guidelines will increase their wage bill because of the new officers who will have to be part of every underwriting firm.

IRA issued the rules in October to improve transparency in the industry. However, after various meetings with industry chiefs, it was noted that some of the requirements by IRA are not attainable within three months.

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