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Treasury proposal to amend law set to affect brokers operation

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Henry Rotich

Insurance brokers who act as intermediaries between underwriters and clients are the biggest casualties in the new proposal by Treasury to amend the Insurance Act and do away with their intermediary role.

Some of the disruptive changes include new accounting rules that threaten to run them out of business. “The current provisions of the Insurance Act allow the insured to pay for insurance premiums through intermediaries.

The intermediaries delay the payments for the premium, thereby putting the insured at risk,” said Treasury CS Henry Rotich in the budget speech last Thursday. “In order to ensure prompt payment of premium to the insurer, and taking into account the expanded mode of payment of premiums through digital platforms, I propose to amend the Insurance Act to require the insured to make payments in respect of premiums direct to the insurer.

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This will enhance prompt coverage of the insured.” Even before Mr Rotich’s suggestion came to light, the future of brokers in the insurance industry had been in doubt, after many underwriters expressed their desire to cut them out in their interaction with clients.

This came as a result of the mandatory adaptation of new stringent accounting rules dubbed International Financial Reporting Standards (IFRS 17), that require underwriters to consolidate their capital bases and cut costs while strengthening their balance sheets.

The cost-cutting, according to Alex Mbai, a partner at audit firm KPMG, speaking in a previous interview, will come by underwriters doing away with brokers who already earn low commissions.

“The belt is tightening on the waist of the entire industry,” said Mbai. “The tighter things get for insurers, the worse they will get for the brokers. Once these rules come into effect in 2021, insurers will have to change their distribution channels. The traditional insurance broker could be kicked out,” Mbai noted.

Brokers have in the past slammed the State for bypassing them while sourcing for the services from underwriters. Under their lobby, the Association of Insurance Brokers-Kenya, they say they have lost more than 50 per cent of the market share as a result of State agencies, more so parastatals preferring to deal directly with insurance firms. “… parastatals, which particularly need insurance services, as they seek cover for their properties and employees used to come to us for services.

Now they have chosen to contact the underwriters directly,” said AIBK Vice Chairman Nelson Omollo in an interview.

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Business

Absa became the new competitor on the Ethiopia market.

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Absa Bank Of South Africa’s  has become the Latest Multinational Corporation to show Interest in Organizing the Ethiopia market.

Ethiopia has since Prevented Foreign Ownership in Economic Sectors that Includes Banking but Abiy Ahmed has began to take fast Action on the issue since he came to power in April.



Jason Quinn, the bank’s chief financial officer, told reporters that Absa was investigating on how and where to enter in a number of populating market, including Nigeria and Angola.

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Am Entrance made into the Ethiopia market of 100 million People, would be part of a Scheme made by Absa after it break from Britain’s Barclays in 2017.

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Ethiopia has plans to liberalise state-owned companies including Ethiopian Airlines, Ethio Telecom, Ethiopian Shipping & Logistics Services Enterprise, and Ethiopian Electric Power, in order to attract foreign direct investment and stimulate growth.

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Motherland News

Black box of the Ethiopian Airline Crash recovered.

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The United Nations described the Sunday crash of the Ethiopia airline as disastrous saying it has cost them a great loss.



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Michael Moller, director-general of the U.N. European head garters said this was the worst loss suffered in years in Geneva in a statement where 150 people where gathered.

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Investigators in Ethiopia have recovered the black box from the ill-fated Ethiopian airline this Sunday.

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