Insurance is the act, system or business of providing financial protection for property, life, health etc. against specified contingencies such as death, loss or damages, and involving payment of regular premiums. Payment is made with consideration of a payment proportionate of the risk involved.
Origin of Insurance in Kenya
Insurance in Kenya has existed for about 60 years and it was firstly owned by the British insurance industry, usually governed by insurance act and insurance regulatory authority. During colonialism, the British settlers started to invest in economic activities such as farming thus needed protection for their investments from risk thus come up ...view middle of the document...
The growth and development of the industry in Kenya
A post in the Business Daily on September 20th 2011 written by David Musyoka, Xinhua stated that the industry had maintained its growth trend of 22.7% growth in premium income in 2010 with growth being driven by an increase in the number of people buying new insurance policies. This gross premium by the industry was 840 million us dollars in 2010 compared to 680 million dollars in2009 which represented a growth of 22.7%.
The penetration of insurance also grew from 2.8% in 2009 to 3% in 2010 meaning that the number of people buying insurance went up. Kenya currently has 46 licensed insurance companies and the industry produces a big increase in its earnings each year. The chairman of AKI Stephan Wandera said that the industry can grow tremendously if the government brings in assets into the industry instead of only playing the role of regulation. He welcomed the plans by government to provide life and medical insurance benefits to all its employees, he believes it will provide a benchmark of all employees in the country and help Kenyans appreciate the importance of insurance rather than use of fund-raising to meet cost of unexpected happenings.
The industry expects a further growth of 6.5% this year. It stated that it could be affected by high inflation due to price of food and fuel going up. But with competition that has accelerated product development and innovations in the market, in particular efforts aimed at researching the mass market with affordable price product drives the growth.
Regulations for forming an insurance company
When one wants to form an insurance company, has to meet the required qualifications set by the state, understanding of the insurance codes so as to ensure implementation and regulation of rates and investments. The insurance company should allow the courts to expand on the policy terms on behalf of the state. The following are the key requirement for the formation of an insurance company:
* A formal application vide form no. INS. 30-1 and its appendices.
* Registration fee of Kshs. 150,000 for insurers and Kshs. 250,000 for a Reinsurer in a banker’s draft Payable to “The permanent Secretary to the Treasury”.
* Certificate of incorporation.
* Articles and Memorandum of Association.
* A certified copy of the published prospectus, if any.
* A feasibility...