Reinsurers’ body fined Sh722,000 over price fixing

Kenya: Competition Authority of Kenya (CAK) has fined Association of Kenya Re-insurers (AKR) Sh721,715 for engaging in unethical trade practices.

The association is accused of unfairly setting minimum insurance rates to be charged to members of the National Intelligence Service (NIS) when the latter made public intention to renew its group life scheme.

CAK Director-General Wang’ombe Kariuki explained that the association recommended a minimum premium rate of 15 per mille (cost per thousand) to insurance companies after NIS announced intention to renew its group life scheme for the 2013/2014 financial year. This, he said, contravenes section 22(1) (b) of the Competition Act No.12 of 2010.

“NIS wanted to renew its group life scheme for the 2013/2014 financial year. AKR wrote to companies urging them not to price the activity below 15 per mille. NIS complained to us and immediately we launched investigations which revealed that the association had breached the antitrust regulations by fixing price,” said Mr Kariuki yesterday.

He said AKR is further required to give a written undertaking, committing itself to desist from any future conduct that contravenes provisions of the competition regulations.

applicable premiums

We penalised the association based on what they could have benefited by participating in implementing the NIS group life scheme,” he added.Through a circular dated October 2, 2013, the association had advised its members on the minimum applicable premiums on the renewal of NIS Group Life Scheme for 2013/2014 financial year.

Current members of the AKR include, Kenya Reinsurance Corporation; African Reinsurance Corporation, East Africa Reinsurance Company, Zep-Re (PTA Reinsurance Company) and Continental Reinsurance Limited Kenya.

“The setting of the premium rate by the Association and the request to all the insurance companies tendering for Group life cover for the period 2013/2014 to charge the fixed rate amounts to collusion and is in violation of section 21 (1)(3)(a) and (c) of the Act,” Wang’ombe explained.