Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to prevent the risk of an uncertain loss.
Its history in Kenya
The insurance industry in Kenya is regulated by the Insurance Regulatory Authority (IRA) which was set up in 2008. IRA work is to work at improving the regulation and stability of the insurance industry.
The insurance regulatory Authority placed Blue Shield Insurance as another under writer in 2011.The Authority, in partnership with the Commissioner of Police, started the Insurance Investigation Unit to investigate insurance fraud. It also registered the first Islamic insurance firm – First Takafu.
Previously, IRA was a department of the Ministry of Finance, which administered the insurance industry, headed by the Commissioner of Insurance.
The industry operates under an umbrella body, the Association of Kenya Insurers (AKI), established in 1987. It was before then called the Insurance Association of Eastern Africa. Membership to AKI is open to any registered insurance company in Kenya. Its main objective are to:
- promote prudent business practices
- create awareness among the public
- and accelerate the growth of insurance business in Kenya.
At the top of the insurance sector are two reinsurance companies, the quasi-public Kenya Reinsurance Corporation (Kenya Re) and East African Reinsurance Company. By 2010 as a nation we had 44 short and long-term underwriters, of which 21 provide medical insurance. Others include 3,788 insurance agents and 158 insurance brokers.
Kenya’s insurance assets grew by 2.1 per cent to Kshs181.2 billion. Net premiums rose by 33.1 per cent to Kshs85.4 billion and general insurance claims by 30 per cent to Kshs28.l billion.
Under the 2011 amendments to the Insurance Act, any insurer wishing to open a branch of business in Kenya applies to the Authority for approval and further advice.
IRA now holds directors of the insurer to be jointly liable for the recovery of the assets in case of mismanagement. The Authority has power to manage assets of an insurance company in the public interest and take any other action in this regard.
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