On 5th July 2018, President Uhuru Kenyatta officially signed the Insurance (Amendment) Bill, 2018. This is a major development for the industry with regard to payment of premiums and addressing insurance fraud. Some of the major highlights are noted below.
Section 156 was repealed and replaced with the following:
156. (1) No insurer shall assume a risk in
Kenya in respect of insurance business unless
and until the premium payable thereon is
received by the insurer.
(2) An intermediary shall not receive any
premiums on behalf of an insurer.
(3) An intermediary who contravenes
subsection (2) shall be liable to a penalty of one
million shillings on each contravention, payable
to the Policy Holders Compensation fund.
(4) Any officer or director of an
intermediary who contravenes subsection (2)
shall be guilty of an offence, and upon
conviction shall be liable to a fine not
exceeding one hundred thousand shillings or to
an imprisonment term of three months, or to
(5) An insurer shall pay an intermediary
insurance commission due within thirty days
upon receipt of premium.
(6) An insurer who contravenes subsection
(5) shall be liable to a penalty of five million shillings on each contravention,
payable to the Policyholders Compensation
The act also introduced a legal
provision creating offences on insurance fraud, including penalties
intended to address the problem of insurance fraud that continues to be a
major challenge to the stability of the insurance industry in the country.
The amendment further ensures that the Act complies with International
Association of Insurance Supervisors (IAIS) standards on countering