Association of Kenya Insurers (AKI) is pushing its members
to offer covers on... credit terms based on customers’ debt repayment
profile.
This arrangement requires changing the law the stipulates upfront payment of premiums for any cover to be deemed effective.
Chief
Executive Tom Gichuhi said the regulations should be tweaked to
incorporate instalment payments to make insurance more affordable to
customers, especially for products such as comprehensive motor covers.
This arrangement requires changing the law the stipulates upfront payment of premiums for any cover to be deemed effective.
Chief
Executive Tom Gichuhi said the regulations should be tweaked to
incorporate instalment payments to make insurance more affordable to
customers, especially for products such as comprehensive motor covers.
“Many
people want insurance but they can’t afford it. So you either give it
on credit or allow them to pay in instalments or work closely with
actuaries to develop short-term covers,” he said.
“Nothing
is cast on a stone. We can open discussions with the Insurance
Regulatory Authority to change the law and have the idea tested before
full roll-out.”
Firms such as Resolution Insurance have come closer to this by
allowing customers flexible monthly instalment payments by taking
premium loans from its credit wing, Resolution Credit. This allows its
customers to enjoy cover benefits immediately.
Insurers
will have to rely on the services of Credit Reference Bureaus (CRBs)
for customers’ credit ratings before deciding to offer them room to make
piecemeal payment of premiums.
“One way of controlling
debtors will be to make use of CRBs so that customers who fall back on
payments are listed just like it happens with bank customers. Those in
default will not access insurance from any other insurer,” said Mr
Gichuhi told the Business Daily.
Kenya has three CRBs —
Transunion, Metropol and Creditinfo — licensed as aggregators of
consumer credit history but mainly serve banks and saccos.
Jubilee
Insurance Group CEO Julius Kipng’etich said the proposal is welcome and
would support other innovations in pulling insurance penetration from a
15-year low of 2.43 per cent.
He said cash-and-carry
regime that requires premiums to be paid upfront before a cover is
issued limits payment options for customers.
“Working
closely with banks and telcos can greatly assist in closing this gap and
reducing the default rate of premium payments,” he said
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