Brokers accuse insurers of eating into their business

AIBK chairman Nelson Omolo. PHOTO | FILE 

By JAMES NGUNJIRI

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Summary

• They say direct procurement, especially by public entities, has emerged as one of the trends that threaten their survival.
• The brokers have for several months been fighting with insurers over what they see as deliberate efforts to render them irrelevant in the industry value chain.
• Mr Omolo said a number of underwriters have also resorted to using in-house agents to handle clients. 

Insurance brokers have warned of a looming extinction of their business as underwriters increasingly opt for direct contact with policy buyers.

The Association of Insurance Brokers of Kenya (AIBK) says direct procurement, especially by public entities, has emerged as one of the trends that threaten their survival.

The brokers, who depend on commissions for their subsidence, have particularly taken issue with publicly advertised tenders that include “underwriters only” riders to sideline them.

“We discourage direct procurement because underwriters can neither rival brokers in technical know-how nor give personalised services,” said AIBK chairman Nelson Omolo.

The brokers have for several months been fighting with insurers over what they see as deliberate efforts to render them irrelevant in the industry value chain.

They had previously locked horns with banks which have resorted to selling insurance policies under bancassurance.

In January, the Bima Intermediaries Association of Kenya, which represents insurance agents, also criticised underwriters for creating portals that allow importers to log in and procure marine cargo insurance policy directly.

Insurance Regulatory Authority data shows that net spending on commissions for the first quarter of 2017 was Sh2.92 billion, representing a 6.6 per cent decline from Sh3.12 billion reported in the same period last year.

Mr Omolo said a number of underwriters have also resorted to using in-house agents to handle clients. 

“We are saying this is wrong because if you want to appoint an agent or a broker, you must go through due process,” said Mr Omolo.

AIBK has about 200 members who have also been pushing for increased commission even as they face stiff competition from banks.

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