A Consumer lobby group wants the insurance industry regulator to set up a grading system for underwriting firms to give early warning signs when a company is going under.
Consumer Federation of Kenya yesterday said the Insurance Regulatory Authority should take a more decisive and consumer friendly action to deal with companies that are not honouring claims.This comes after the IRA on Wednesday placed Concord Insurance under statutory management citing its failure to pay claims, levies to the regulator and operational problems which were not detailed.
Cofek Secretary General Stephen Mutoro said the IRA has instead always "ambushed" clients of failing insurance firms with closure via statutory management leading to inconvenience and losses to the affected policyholders.
"History shows that only one company has been able to recover from statutory management," said Mutoro yesterday. "IRA should come up with a sort of early warning sign sort of like put a firm that is showing some problems under say a yellow grading and if the problem escalates to put it in a red alert grade so that consumers can make informed decisions."
One of Concord's biggest broker yesterday told the Star the company owes him an estimated Sh10 million. However IRA is yet to quantify the exact debt it has since it has not been providing its financial reports to the regulator regularly as required by law.
"This company has had a unique collapse compared to what the industry has seen before. It is not liquidity problems as such but shareholder wrangling. Their liabilities may not be so much," said the broker who requested anonymity to protect his business.
Concord had a market share 0.2 per cent as at end 2011 with a gross written premium of Sh145 million. It had 67 employees and operated three branches. It undewriting was mostly in motor private and motor commercial.