REQUIREMENTS FOR STARTING AN INSURANCE BROKER/AGENCY

The insurance business in Kenya is regulated by the Insurance Regulatory Authority under the Insurance Act CAP 487. The Insurance Regulatory Authority licenses all companies undertaking the insurance business such as insurance and reinsurance companies, insurance and reinsurance intermediaries, loss adjusters and assessors, risk surveyors and valuers. It also formulates and implements standards for the conduct of insurance and reinsurance business in Kenya.

Section 2 of the Insurance Act describes the difference between an insurance agent and insurance broker. An insurance agent is a person, not being a salaried employee of an insurer who, in consideration of a commission, solicits or procures insurance business for an insurer or broker. On the other hand, an insurance broker is an intermediary concerned with the placing of insurance business with an insurer or reinsurer for or in expectation of payment by way of brokerage, commission, for or on behalf of an insurer, policy-holder or proposer for insurance or reinsurance.

What are the necessities for establishing an insurance broker firm?

The registration requirements are stipulated under sections 19-31 of the Insurance Act. The Act clearly provides that only registered companies are allowed to conduct insurance businesses. The company that conducts such an unregistered business commits an offence is liable to a fine not exceeding five million Kenya shillings.

  1. The person seeking registration to conduct an insurance business must be a body corporate registered under the Companies Act of 2015.
  2. At least two third (2/3) of the controlling interest in the company, whether in terms of shares, paid up share capital or voting rights, must be wholly under the control of;
  3. citizens of an East African country
  4. a partnership whose partners are all citizens of an East African country; or
  5. a body corporate whose shares are wholly owned by citizens of one of the member countries of the East African Community or the Government, or a combination of them.
  6. The applicant must have passed the Certificate of Proficiency examination for insurance agents which is offered at the College of Insurance.
  7. The application for registration must be accompanied by the following documents;
  8. A copy of the memorandum of association or other instrument or document by which the applicant is constituted.
  9. A certified copy of the published prospectus.
  10. A copy of each of the proposal and policy forms, endorsements and any form of written matter describing the terms or conditions of or the benefits to or likely to be derived from policies or intended to be used by the applicant.
  11. Statements of the premium rates, advantages and terms and conditions to be offered in connection with insurance policies and details of the bases and formulae from which those rates have been calculated together with a certificate in connection with long term insurance business by an actuary that such rates, advantages, terms and conditions are sound and workable.
  12. A detailed statement of assets and liabilities in Kenya at the date of application.
  13. A description of all reserves made by the insurer with detailed descriptions of the method, basis and formula for calculating each of the reserves.
  14. A certificate from the Central Bank of Kenya specifying the amounts and details of deposits made by the applicant in Kenya Government securities estimated at the market value of the securities on the day of deposit. The deposit for a long term insurance business or general insurance business is a sum of five million shillings or five percentum of the total assets, whichever is higher.
  15. Certified copies of reinsurance contracts outlining re-insurance strategies and arrangements, which have been approved by the Commissioner, for insurance of liabilities in respect of which persons, property or interests are to be, insured by the insurer in the course of carrying on insurance business.
  16. A Statement containing all proposals and policy forms of all the classes of business the proposer intends to transact.
  17. Proof of payment of the prescribed fee
  18. Proposals stipulating how the applicant will carry on business and financial forecasts and other documents and information, if any, as may be prescribed
  19. The applicant should have an adequate number of technically qualified and competent staff. A principal officer who holds a technical or professional qualification in insurance, accounting or banking approved by the Commissioner, and who has more than ten years’ experience in a managerial capacity in the respective sector.

REQUIREMENTS FOR STARTING AN INSURANCE BROKER FIRM/AGENCY

The insurance business in Kenya is regulated by the Insurance Regulatory Authority under the Insurance Act CAP 487. The Insurance Regulatory Authority licenses all companies undertaking the insurance business such as insurance and reinsurance companies, insurance and reinsurance intermediaries, loss adjusters and assessors, risk surveyors and valuers. It also formulates and implements standards for the conduct of insurance and reinsurance business in Kenya.

Section 2 of the Insurance Act describes the difference between an insurance agent and insurance broker. An insurance agent is a person, not being a salaried employee of an insurer who, in consideration of a commission, solicits or procures insurance business for an insurer or broker. On the other hand, an insurance broker is an intermediary concerned with the placing of insurance business with an insurer or reinsurer for or in expectation of payment by way of brokerage, commission, for or on behalf of an insurer, policy-holder or proposer for insurance or reinsurance.

What are the necessities for establishing an insurance broker firm?

The registration requirements are stipulated under sections 19-31 of the Insurance Act. The Act clearly provides that only registered companies are allowed to conduct insurance businesses. The company that conducts such an unregistered business commits an offence is liable to a fine not exceeding five million Kenya shillings.

  1. The person seeking registration to conduct an insurance business must be a body corporate registered under the Companies Act of 2015.
  2. At least two third (2/3) of the controlling interest in the company, whether in terms of shares, paid up share capital or voting rights, must be wholly under the control of;
  3. citizens of an East African country
  4. a partnership whose partners are all citizens of an East African country; or
  5. a body corporate whose shares are wholly owned by citizens of one of the member countries of the East African Community or the Government, or a combination of them.
  6. The applicant must have passed the Certificate of Proficiency examination for insurance agents which is offered at the College of Insurance.
  7. The application for registration must be accompanied by the following documents;
  8. A copy of the memorandum of association or other instrument or document by which the applicant is constituted.
  9. A certified copy of the published prospectus.
  10. A copy of each of the proposal and policy forms, endorsements and any form of written matter describing the terms or conditions of or the benefits to or likely to be derived from policies or intended to be used by the applicant.
  11. Statements of the premium rates, advantages and terms and conditions to be offered in connection with insurance policies and details of the bases and formulae from which those rates have been calculated together with a certificate in connection with long term insurance business by an actuary that such rates, advantages, terms and conditions are sound and workable.
  12. A detailed statement of assets and liabilities in Kenya at the date of application.
  13. A description of all reserves made by the insurer with detailed descriptions of the method, basis and formula for calculating each of the reserves.
  14. A certificate from the Central Bank of Kenya specifying the amounts and details of deposits made by the applicant in Kenya Government securities estimated at the market value of the securities on the day of deposit. The deposit for a long term insurance business or general insurance business is a sum of five million shillings or five percentum of the total assets, whichever is higher.
  15. Certified copies of reinsurance contracts outlining re-insurance strategies and arrangements, which have been approved by the Commissioner, for insurance of liabilities in respect of which persons, property or interests are to be, insured by the insurer in the course of carrying on insurance business.
  16. A Statement containing all proposals and policy forms of all the classes of business the proposer intends to transact.
  17. Proof of payment of the prescribed fee
  18. Proposals stipulating how the applicant will carry on business and financial forecasts and other documents and information, if any, as may be prescribed
  19. The applicant should have an adequate number of technically qualified and competent staff. A principal officer who holds a technical or professional qualification in insurance, accounting or banking approved by the Commissioner, and who has more than ten years’ experience in a managerial capacity in the respective sector.

Lawquery Team

info@lawquery.co.ke

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