Annual licences for insurers scrapped
- Posted by: frokem
- Category: Insurance, Uncategorized
Insurers will no longer have to to pay for annual licences, National Treasury Cabinet secretary Henry Rotich has said.
This marks the end of an era where insurance companies have been subjected to gruelling and costly licencing procedure every year in order to do business.
Other industry players who operate on annual licences include insurance risk assessors, brokers, and surveyors.
“Annual licensing of financial institutions is time consuming and is no longer necessary in this era of risk based supervision. Accordingly, the Government amended the Banking Act in 2015 to provide for perpetual licensing. In 2016, the same was extended to institutions licensed by the Retirement Benefits Authority,” the CS said yesterday when he presented the annual Budget Statement to Parliament.
“In this regard, I propose to amend the Insurance Act to further provide for perpetual licensing of insurers. However, the intermediaries such as insurance brokers, loss assessors, among others, will continue to be issued with annual licensing,” he said. A perpetual licence allow businesses to use permits indefinitely.
Kenya has about 50 insurance companies, two of which are under statutory management.
Under the Insurance Act, issuance of licences to insurance companies is a preserve of the Insurance Regulatory Authority’s board.
All insurance industry players are required to renew licences annually as a measure to enhance surveillance on the sector.
They must file applications by end of September for licences to be processed by December 31 through an electronic platform.
While missing a licence is not as hard hitting as deregistration, it means that though a company is still considered as duly registered, it cannot conduct new business until it meets all the requirements set to acquire a licence.
Some of the requirements a company must meet before getting a licence include registration fee of Sh150,000 for insurance firms and Sh250,000 for reinsurers and a copy of certificate of incorporation. Others are paid up share capital of at least Sh150 million for life insurance business or Sh300,000 for general insurance business, while a reinsurance underwriter is to have a minimum of Sh800 million.
Other requirements are details of shareholders and shareholding structure of the company, where individual shareholding is capped at 25 per cent, a curriculum vitae of the principal officer and proposed reinsurance plans among others.