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report

TALKING NOTES FOR AKI CHAIRMAN, MR. PATRICK TUMBO DURING THE LAUNCH OF THE 2015 INSURANCE INDUSTRY ANNUAL REPORT ON 21ST SEPTEMBER 201

 

AKI Executive Director, Mr. Tom Gichuhi

CEOs and Representatives of AKI member companies

Stakeholders in the insurance industry       

Members of the fourth estate

Ladies and Gentlemen

Good morning,

I am happy to be here today as we release the 12th issue of the Insurance Industry report for the year ended 31st December 2015.

The year 2015 saw some growth in the industry with gross premiums hitting 173billion up from 156billion in 2014. In the context of the country’s Gross Domestic Product, this placed insurance industry penetration at 2.97%.

You will appreciate that, even as it continues to grow, the insurance industry is operating in a constantly changing environment. The financial sector, where the insurance industry sits, is receiving more scrutiny from regulators and other statutory bodies.

To this end, there were some significant changes in statutory requirements including the risk based supervision where insurance companies will not hold a standard capital level but each will be determined by the risks associated with its business. The regulations are set to take effect in a phased implementation concluding in 2018.

The year under review also saw continued discussions to amalgamate all financial services under one regulatory body, the Financial Services Authority. The rationale for consolidating four bodies into one regulator is to increase integration, enhance convergence between banking, insurance, capital markets and long-term pensions sectors and reduce on regulatory arbitrage and address regulatory gaps.

Like all other economic sectors, the insurance industry is also experiencing proliferation of technology as more companies digitize their processes to make them more efficient and cost effective. As AKI, our role in this is to encourage and facilitate industry wide adoption of technology and especially in distribution channels and customer service.

As an industry, we take cognizance of the role that the Government has played in growing the insurance industry. In particular, its role in Agriculture Insurance where farmers were given subsidies for agriculture insurance premiums. This initiative has been further enhanced in 2016 with the injection of Ksh600million in the National Budget.

Marine Cargo Insurance has also benefited from Government intervention after the Cabinet Secretary, National Treasury directed Kenya Revenue Authority to work with stakeholders to implement Section 20 of the Insurance Act which stipulates that Kenyan insurance should not be placed with insurers not registered under the Act. AKI is actively engaged with other key stakeholders including; IRA, KRA, Kenya International Freight and Warehousing Association (KIFWA), Intergovernmental Standing Committee on Shipping (ISCOS) and the Ministry of Transport and Infrastructure in the process of implementing this section of the Act.Kenyan insurance companies are currently denied huge business in premiums estimated at Ksh20billion. Further Kenyan importers under the current practice have limited recourse if anything happens to their imports before they arrive in the country.

Ladies and gentlemen,

I would like to note here that AKI is progressing with its 2016-2020 Strategic Plan and we are on course with implementing some of the core initiatives that will have a positive impact on the industry which include data integration and analysis to drive business, capacity building for the industry, undertaking research to ensure informed decision making, raising consumer awareness and seeking mutually beneficial partnerships.

All in all, the Kenyan insurance sector is one of the better performing on the African continent and its growth potential can be seen in the foreign companies acquiring or merging with established Kenyan insurance companies.

With these few remarks, I wish to invite the AKI Executive Director, Mr. Tom Gichuhi to share more highlights on the industry performance.

Thankyou

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