More firms join insurance hall of shame

Invesco Insurance was hit with the highest fine of Sh7.9 million for delayed payment of claims. [Courtesy]

As a teacher, Henry Anyangu needed no lectures on the importance of educating his children.

He just needed to know how best to secure that goal.

So when Corporate Insurance Company, an insurer that started operations in 1982, came calling in July 2010, he was all ears.

He was in another saving plan but agreed to sign up for an education policy for his daughter five years later.

Between February 2015 and February 2021, he faithfully paid monthly premiums of Sh1,503 for a policy with Sh100,000 as the sum assured - money that is paid to the nominee in case the policyholder dies before maturity of the plan.

Upon the maturity of the plan in February last year, Mr Anyangu began the agonising journey of getting his dues  - which is Sh106,000 made up of Sh100,000 claim amount and Sh6,000 terminal bonus.

Sometime last December, he went to the insurers’ offices in Nairobi’s Upper Hill area to initiate the process, but on that day, he was told the office had no internet.

“The head of finance assured me I was going to get the money before Christmas. It is January now, and I am yet to receive my money,” he says.

Anyangu, who lives in Kakamega, has also made numerous phone calls and visited Corporate Insurance’s offices in Kisumu without success.

He has had to write to the Insurance Regulatory Authority (IRA), seeking assistance to recover his money from the insurer, which the regulator fined Sh200,685 in 2019 over late payment of claims.

“I have made efforts to reach out to the officers representing the firm both on phone and through physical visits to their offices. All these efforts have borne no fruits. Kindly help me recover my claim,” he wrote to IRA.

Anyangu is one of the many customers who have been left frustrated by underwriters in a country where insurance penetration had dipped for three consecutive years to close at 2.17 per cent in 2020.

But not all customers can report their complaints to IRA. Many follow up their cases with insurers or opt for redress in courts. In the third quarter ended September last year, IRA says it received 467 complaints against insurers.

Over this period, the regulator managed to resolve 89 cases - less than a fifth of the complaints received — leaving the majority unresolved. During this period, out of the 92 complaints filed against life insurers, Corporate Insurance topped the list with 30 cases, followed by Pioneer Assurance (16), Madison (14), Jubilee (6) and Britam (5).

The top complaint by customers has been delayed settlement as is the case with Anyangu. Out of the 1,637 grievances filed in 2020, 900, or 55 per cent, related to delayed payments.

Other key grievances by customers were declined claims, unsatisfactory offers, erroneous deductions and cancelled claims, according to IRA. IRA data for the last six years shows that while the number of complaints has been declining, the ratio of resolved cases to the total cases has been worsening.

Over the last six years, companies that have consistently made it to IRA’s list of insurers with high customer complaints include Invesco, Madison, Pioneer, Monarch, CIC, Britam, Jubilee, APA, Corporate and Kenya Alliance.

Between 2017 and September last year, of the insurers offering long-term products such as life policies, pension, education and investment products, Pioneer Insurance had the highest number of complaints at 381.

Other companies with more than 100 complaints within this period included Madison (233), Britam (231), Corporate (230), Capex (218), CIC (165) Sanlam (159), APA (118) and Pan Africa (108).

General insurance, which includes covers such as motor vehicle, medical, personal accident and workmen’s compensation, has been accounting for a majority of insurance complaints.

Here, the African Merchant Company (Amaco) has been in the lead, with 604 cases between 2017 and September last year. Others are Invesco (559), Xplico (479), Kenya Orient (453), Monarch (405), Trident (282), Jubilee (277), Madison (262), Kenya Alliance (261) and Directline (236). In 2020, IRA fined nine insurers Sh17.6 million for several breaches, including late payment of claims and failure to submit audited accounts.

Invesco Insurance was hit with the highest fine of Sh7.9 million for delayed payment of claims. Others fined for late payment of claims were Keninidia Assurance (Sh1.05 million), Kuscco (Sh161,739) and Kenya Alliance Sh51,547.

IRA last year published a proposal pushing for a reduction in the time insurers take to pay claims to within 30 days from the day they are lodged by claimants.

The proposal, contained in the draft National Insurance Policy, wants to cut this period from the current 90 days in a bid to address delayed payments and other challenges that stand in the way of growing insurance penetration in the country.

“Over 70 per cent of complaints by consumers of insurance services concern delayed settlement of claims. Other markets have a period of 30 days on average. The 90-days period is quite long compared to the 30-day period,” says IRA in the draft policy.

IRA lists delay in settlement of claims, unethical business practices and negative customer experience at the point of claiming among the key factors that have contributed to the public’s “lack of trust and negative perception” of the insurance industry.

“The major factors contributing to delay in settlement of claims include inefficient claims process, lack of experts to perform loss adjustments for specialised areas (for example crop cutters and calculating agents in the agricultural sector), under-capitalised insurers, and insurers with low liquidity,” IRA says.

IRA said in October 2020, for instance, 20 insurance companies, or 35 per cent of 56 licensed businesses, were facing capital shortfall impacting their ability to pay claims on time. Other insurers also take longer to process claims in areas such as motor insurance because they have to investigate and shield themselves from fraud.

In the last 20 years, 10 insurance firms have been placed under statutory management, according to IRA data.