INSURANCE FRAUDSTERS!

Well, I recently read an article in one of the mainstream dailies that the Association of Insurance Brokers of Kenya (AIBK) has moved to court to challenge the law that stipulates penalties on insurance fraud. The association has sued the National Treasury Cabinet Secretary, the Attorney-General and the Insurance Regulatory Authority while seeking to stop the implementation of the Insurance (Amendment) law.

Reason:

According to the details of the suit, amendments to the bill did not balance the rights of all industry players frustrate government policy of growing insurance penetration and criminalises handling of premiums by insurance brokers. Through their lawyer Paul Muite, they say the bill that was assented to on July 5 also seeks to bar brokers from collecting premiums.

“The implementation of the contentious law will have far-reaching implications that will result in wiping out the business on insurance brokerage in Kenya as well as jeopardise livelihoods,” said Mr Muite.

The contentious bill;

MPs passed the bill following lobbying and apparent kickbacks by insurance firms on reports that brokers delay remitting of premiums and that their agents engage in fraud.

Insurance firms now see brokers for who they are, an unnecessary middleman!

Protect this crime, please! Damn!

But now the brokers are seeking court protection, saying the new law puts them at risk of being arrested and prosecuted following its gazettement on July 19.

What is the crime?

Usually, brokers and agents act as intermediaries between policyholders and the insurance companies, advising buyers on products, policies available, and collect premiums.

From the suit details, the AIBK alleged that the sector will be plunged into a crisis leading to the loss of business and revenue among its members.

It also alleged that at least 5,000 individuals whose livelihood as well as families depend on them will be affected. The group has termed the disputed law as punitive and discriminatory against the petitioners’ members.

Sickening;

To that point, I sit up straight and sigh! It’s sickening that AIBK is fighting to undo a bill meant to put a check on crime. For the bill to be drafted, Insurers had suffered enough at the hands of these brokers.

Let’s take a look at the suffering;

·         Consumers of insurance products end up paying much more premiums to this middleman to cater for brokerage and transaction fees – unnecessarily putting more pressure on their pockets and or businesses.

·         The middleman still charges the insurance company for acting as agents – thus reducing the revenue portfolio for the insurance company.

·         As if the above is not enough, brokers still hoard these premiums and delay remittances to the insurance companies thus chocking the insurers further.

·         Various frauds reported in the recent past have been orchestrated by staffs of these brokers using insider information and expertise. This, insurers say contributes to more than 15% of claims lodged – FRAUD!

My English teacher back then, one Madam Makhanu, taught me that it is always fine, no matter what society will think of one, to call a spade a spade! I will this one out without fear of contradiction, insurance brokers are an unnecessary middleman in the insurance industry – PERIOD!

The suit is therefore utter gimmick and a complete mockery of the court process and the suit should be thrown out with costs to the complainant!