Insurers to pay penalties in cases of delayed settlement KBC

Insurers who employ delaying tactics in settling claims will pay penalties on the amount due in new measures by the Insurance Regulatory Authority (IRA) to streamline the industry.

This is contained in the new five-year strategic plan by the regulator that now requires insurers to be clear on documentation they require to settle claims.

IRA is banking on digitalization of underwriting services to increase uptake of insurance, especially by the youth.

The latest industry report by the IRA indicates that the best insurer in settling liability claims under general insurance business had a 56 percent settlement ratio.

Get breaking news on your Mobile as-it-happens. SMS ‘NEWS’ to 22163

The low settlement ratio is blamed on delay tactics employed by insurers when claims are due.

Currently, the law requires insurers to settle verified claims within 90 days.

To address the delays, IRA in its new five-year strategic plan proposes to penalize insurers who delay settling claims when all documentation have been filed, after the lapse of the 90 days, the amount due would attract interest at a rate that would be determined.

In addition, the regulator plans to undertake more insurance sensitization targeting the general public as well as require insurers to be clear on the documents they require from the insured to process claims.

The new five-year strategic plan also seeks to address emerging issues such as cybersecurity threats and loss of data.

National Treasury CAS Nelson Gaichuhie underscored the need for underwriters to leverage technology in the development and distribution of insurance products that should be simplified and diversified to address the needs of the market.

Tell Us What You Think