Insured persons who fail to keep up with their insurance premiums will
be listed with the credit reference bureaus beginning next year. PHOTO |
FILE
By GEORGE NGIGI
In Summary
- Insurance companies usually pay their sales officers bulk commissions on initial phases of the policy contract. This means that when the premiums stop coming in the insurer is left in a loss position.
Insured persons who fail to keep up with their
insurance premiums will be listed with the credit reference bureaus
beginning next year, the Association of Kenya Insurance (AKI) has said.
Tom Gichuhi, chief executive of the association said a memo had already been sent out to all insurance companies asking them to upgrade their systems so as to be able to generate the required information.
“This information will be shared even with the banks because we are going to join the general platform so that if you owe an insurance company premiums and are trying to access a loan, the bank will be able to first refer you to the insurance company you clear your premiums so that you access the loan,” said Mr Gichuhi.
The insurance industry is however yet to agree on the number of months that a policy has to go unserved before it is declared a default.
AKI hopes to use the listing to stop people moving from taking a cover and leaving only to stop paying the premiums later and move to another insurance company.
Tom Gichuhi, chief executive of the association said a memo had already been sent out to all insurance companies asking them to upgrade their systems so as to be able to generate the required information.
“This information will be shared even with the banks because we are going to join the general platform so that if you owe an insurance company premiums and are trying to access a loan, the bank will be able to first refer you to the insurance company you clear your premiums so that you access the loan,” said Mr Gichuhi.
The insurance industry is however yet to agree on the number of months that a policy has to go unserved before it is declared a default.
AKI hopes to use the listing to stop people moving from taking a cover and leaving only to stop paying the premiums later and move to another insurance company.
Bulk premiums
Insurance companies usually pay their sales officers bulk commissions on initial phases of the policy contract. This means that when the premiums stop coming in the insurer is left in a loss position.
Insurance companies usually pay their sales officers bulk commissions on initial phases of the policy contract. This means that when the premiums stop coming in the insurer is left in a loss position.
The sector is however likely to face legal
headwinds in implementing the system given that the payment of premiums
is purchase of service and not a credit.
The system allows for use by credit providers and
not service companies. It has however accommodated utility companies,
such as electricity and water companies, to share information on
defaulters.
Banks had to wither several court cases to start
sharing negative information. Recently the law was changed to allow
sharing of positive information by CRBs and it remains to be seen
whether insurance companies will push for those who faithfully service
their policies to be recognized and receive incentives such as lower
borrowing rates
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