The Insurance (Amendment) Bill, 2023

SPECIAL ISSUE

Kenya Gazette Supplement No. 67 (National Assembly Bills No. 18)

REPUBLIC OFKENYA

KENYA GAZETTESUPPLEMENT

NATIONALASSEMBLYBILLS,2023

| NAIRBI,12thMay,2023 | | |---------------------------------------------------|---------| | CONTENT | CONTENT | | Bill for Introduction into the National Assembly- | PAGE | | The Insurance(Amendment) Bill,2023 | 423 |

PRINTEDANDPUBLISHED BYTHE GOVERNMENTPRINTER,NAIROBI

THEINSURANCE(AMENDMENT)BILL,2023

A Bill for

AN ACTofParliament to amend the Insurance Act

ENACTED by theParliamentofKenya,asfollows

• 1.This Act may be cited as the Insurance (Amendment)
• Act.2023.
• 2.Section 40 of the Insurance Act is amended by deleting the proviso to subsection (1).
• 3.The Insurance Act is amended by inserting the following
• newsectionimmediatelyaftersection67G

Offences relating to the managementof aninsurer.

• 67H.(1)Anyshareholder,director, principal officer or management staff ofan insurerwho-
• (a) fails to take all reasonable steps to secure the compliance of a registered orlicensedperson with thisAct;
• (b)fails to take all reasonable stepsto
• secure the accuracy and correctness of any statementorreport submitted under this Act or any other applicable written law;
• (c) failstosupplyanyinformation required or effect any directive issued
• under this Act;
• (d) fails, without lawful justification, to
• settle a judgment or any claim under this Act;or
• (e) without claim of right takes or converts any property of the insurer to his or her personal or associate's use or gain, including-
• (i)permanently depriving the insurer of the property;
• (ii) using the property as a pledge or security;

Shorttitle.

Amendment of section40of Cap. 487.

Insertion of a new section67Hof

Cap.487.

• (ili)receiving the insurer's property and failing to remit or reasonably account to the insurer;or
• (iv)dealing with the property of an insurer in such a manner that it cannot be returned in the condition in which it was at the time of the taking or conversion,

commits an offence under this Act.

• (2) A person who commits an offence

2. under this section shall be liable on conviction- 3. (a) on a first offence- 4. (i) in the case of an individual, to a fine not exceeding five million shillings or to imprisonment for a term not exceeding two years;or 5. (ii) in the case of a company,to a fine not exceeding ten million shillings; 6. and 7. (b) on any subsequent offence- 8. (i) in the case of an individual, to a 9. fine not exceeding ten million shillings or to imprisonment for a term not exceeding five years;or 10. (ii) in the case of a company,to a fine notexceedingthirty million 11. shillings.

• (3) The court may make an order for the payment by the person convicted of an offence under this section of compensation to a person who suffered loss by reason of the offence.
• (4) An order under subsection (3) may be in addition to or in substitution of any other penalty or remedy available to that person.
• (5) The amount of compensation under

15. subsection (3) shall be- 16. (a) the loss sustained or adverse suffered by the person claiming compensation; 17. or

• (b) the profits that have accrued to the person liable to pay the compensation.

4. Section 70 of the Insurance Act is amended by deleting the word "advisory"appearing in subsection (2). 5. Section 150 of the Insurance Act is amended in the marginal note by deleting the word "surveyors" and substituting therefor the words "insurance surveyor".

Amendment of section 70 ofCap. 487.

Amendment of section 150of Cap.487.

MEMORANDUM OF OBJECTSAND REASONS

This Bill has been submitted by the Cabinet Secretary for the National Treasury aspart of theproposals for theBudget for 2023/2024.The object of this Bill is to enhance accountability within insurance companies and observance of fiduciary duties as well as professional responsibilities by senior managers of insurance companies by amending the Insurance Act (Cap.487) toprovide foroffences and penaltiesrelating to the management

of insurance companies. The amendments will also ensure that insurance companies take responsibility in case an insurance company fails.

Statement on the delegation of legislative powers and limitation of fundamental rights and freedoms

TheBill doesnotlimit fundamental rights andfreedoms.

Statement that the Bill concerns county governments

TheBill doesnot concern County Governments in termsof Article

110(l)(a) of the Constitution.

Statement that the Bill is a money Bill within the meaning of Article

114 of the Constitution

Theenactment ofthisBill shall not occasion additional expenditure

ofpublicfunds

Dated the 3rd May,2023.

KIMANIICHUNG'WAH

Leaderof theMajorityParty.

Section40(1)of Cap.487whichitisintended toamend-

• (1)Whereupon examination of a return,reinsurance document or other documentof or furnished by an insurer,it appearsto the Commissioner that a deposit made under section 32,or the value of the assets ofthe insurer in Kenya.is disproportionately low in relation to the amount ofinsurance business carried on by that insurer inKenya,or that it is in the opinion of the Commissioner desirable for the protection of policy-holders,the Commissioner may. after giving the insurer a reasonable opportunity of making representations, require the insurer to make an additional deposit ofsuch sum as he shall specify not exceeding in the case of general insurance business twenty per cent, and in the case of long term insurance business ten per cent.of the premiums paid or payable in respect ofpolicies ofinsurance issued in the financialyear of the insurer immediately preceding theyear in which the additional deposit is required tobemade:

Provided that the total deposits including the additional deposit shall not exceed three million shillings in the case of general insurance business

and three million shillings in the case oflong-term insurance business.

Section70(2)ofCap.487which it is intendedtoamend-

• (2) The Commissioner may, in any year, after consultation with the Advisory Board,fix for the succeeding year the extent to which the limits prescribed in regulations may be relaxed,and an insurer shall not be deemed to have contravened the provisions of subsection (1) if his expenses of management referred to in that subsection are within those, relaxed limits.

section150of Cap.487whichit isintended toamend-

150. Only registered brokers, agents, risk managers, motor assessors, insuranceinvestigator,loss adjusters.surveyors,medical insurance provider and claims setting agents to carry on business

• (1) No person shall. after the expiry of three months from the appointed date,commence,transact or carry on in Kenya the business of a broker,agent,risk manager,motor assessor,insurance investigator.loss adjuster,insurance surveyor,medical insurance provider,or claims settling agent unless he is registered under this Act.
• (2) No person shall, after the expiry of three months from the appointed date, use the name of broker. agent, risk manager, motor assessor,insurancenvestigator,lossadjuster,nsurance surveyor,medical insurance provider or claims settling agent in a manner to give the

impression that he is registered to commence, transact or carry on any such business,unless he is so registered.

• (3) Nothing in this Act shall prohibit or otherwise render unlawful the continuance of the business of a risk manager,motor assessor,insurance investigator,lossadjuster,insurance surveyor,medical insurance provider or claims settling agent in Kenya in so far as it is necessary to complete any assignment which was undertaken before the appointed date.

2. (4) A person who contravenes the provisions of this section shall be guilty of an offence and liable to a fine not exceeding fifty thousand shillings and, if the offence is a continuing one, to a further fine not exceeding one thousand shilling for every day during which the offence continues or to imprisonment for a term not exceeding one month orboth.