|Muchemi Ndungu, Chairman – Association of Insurance Brokers of Kenya|
Nairobi; Kenya: An insurance lobby wants the State to review the Procurement Act and lower taxes. This, it says will help embrace relationship management in respect to quasi-government enterprises, noting that insurance brokerage is a profession and cannot be treated in the same way as purchase of merchandise.
The Association of Insurance Brokers of Kenya (AIBK) Chairman Muchemi Ndung’u (pictured) said though, insurance penetration has improved to 3.5 per cent in 2013, from 3.1 per cent in 2012, further taxation has increased the cost of insurance - negating the achievements made.
He called on the Treasury to exempt premiums and related commissions from excise duty imposed as it amounted to double taxation. “It will create administration nightmare, not to mention the risk of some brokerage firms closing as the business will no longer be viable. As brokers, there are issues we need addressed at a regulatory level, one of which is the newly introduced taxation being levied on brokers,” he said during the insurers’ 9th annual seminar in Mombasa on Thursday.
“We are calling on the Treasury to exempt premiums and related commissions from excise duty imposed as this in our view is double taxation and will mean most brokerage firms will have to fold due to increased operational expenses.”
The two-day seminar brought together industry players from the East African region and South Sudan. “We are lobbying for the legal recognition of AIBK and other industry bodies to enable us implement self-regulation guidelines to foster ethical practices.” The brokers said lack of a central data mining point has been the sector greatest undoing.
“As we speak, there is no data bank on successes or challenges experienced on covering of risks. I would like to challenge the regulator to work out the modalities on how the insurance industry can join the credit reference bureau to enable us share information on errant clients who do not pay premiums or lodge fraudulent claims as well as brokers who do not remit premiums to the insurance companies,” said Ndung’u.
“While we welcome competition brought about by Bancassurance, only two intermediaries should be allowed to operate; either agents or brokers. Banks should register brokerages so they operate under the laws that govern brokers or remain as agents and only operate under the framework of agents”
The association wants the wordings on bid and performance bonds be changed to allow insurance players participation. “Currently the bonds are only available from banks,” noted Muchemi.