Insurance brokers to assert role in industry growth
Insurance brokers will remain as an important player in the provision of insurance services according to the Association of Insurance Brokers of Kenya (AIBK).
The reaffirmation statement by the broker consortium comes in the wake of increasing scrutiny on the role they play even as government parastatals and insurance providers continue to side-line their role.
Speaking to Citizen Digital, AIBK Chief Executive Officer Eliud Adiedo said he expects the advisory role of insurance brokers to remain in place in spite of the mounting pressure which is seemingly phasing them out.
“We do not advice an insurance entity to purport to know what exposure they face. We advise them to take an independent person such as an insurance broker to offer advice. It’s up to the procuring entity to take all the advice or use what they need. Ultimately they will be doing this from a point of knowledge,” he said.
By over-looking insurance brokers to reach out directly to potential underwriters, policy holders have been short-changed according to the AIBK as they have signed up to insurance covers without necessary considering all the available information contained in the policy documentation.
Currently, the average insurance penetration level stands at 2.8 percent, a figure Mr Adiedo said could be doubled over the next decade.
He said discussions were underway at government level to foster the restoration of the role played by insurance brokers in the country.
“They are on-going discussions that are trying to correct the mistaken belief that going directly to an insurance company will save you money or whatever other reasons that are being floated for someone to want to exclude the services of a professional insurance broker,” he added.
The stalemate pitting insurance service providers against brokers has threatened to push the intermediaries into extinction with the latter losing up to 50 percent of revenue from the fallout so far.
The brokers misery has further been compounded by proposed changes to legislation in the insurance industry under IFRS 17 which requires insurance service providers to report their financial statements according to corporate governance structures.
Brokers fear that insurance providers will toss them to the side as a cost-cutting measure once the legislation comes into maturity in January 2021.
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