Home ECONOMY Uhuru declines to sign insurance bill over cash clause

Uhuru declines to sign insurance bill over cash clause

by biasharadigest
Economy

Uhuru declines to sign insurance bill over cash clause

 Uhuru Kenyatta
President Uhuru Kenyatta. FILE PHOTO | NMG 

President Uhuru Kenyatta has declined to sign into law changes to the insurance Act that allowed brokers and agents to continue receiving cash from policyholders on behalf of insurers.

MPs had approved a Bill that allowed brokers to receive premiums but forward the cash to insurers within 14 days.

However, the President sided with the Treasury in denying brokers the responsibility of handling premiums and want MPs to review the Bill to accommodate his views,

“An intermediary shall not receive any premiums on behalf of an insurer,” read part of President Kenyatta memo to MPs, adding that those in breach face a penalty of 20 per cent of the unremitted premium.

The memo will automatically become law if MPs do not revise the Bill to include the views.

But the National Assembly can turn down Mr Kenyatta’s proposal if two-thirds of the 290 MPs or 233 of the members vote against his views.

The original Bill, approved on February 28, sought to lock out intermediaries such as brokers and agents from collecting premiums from policyholders on behalf of insurers.

It was fronted by the Treasury last July through National Assembly’s Finance Committee chairman Joseph Limo as part of the reforms aimed at ensuring prompt processing and payment of claims.

Lawmakers, however, replaced the clause seeking to bar intermediaries from collecting premiums with one that allowed them to remit the cash within 14 days.

The amendment followed protests from the intermediaries under Association of Insurance Brokers of Kenya, their umbrella body.

Rogue brokers and agents have come under fire for diverting the premiums to conduct other businesses, leading to late remittances to insurance companies. This has resulted in some underwriters refusing to honour claims.

“The premium is the consideration of the insurance contract and, if not remitted, shall affect the validity of the contract,” Mr Kenyatta says in the May 23 memorandum to the MPs.

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