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Insurers review clauses as Covid reality sinks in


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Insurers review clauses as Covid reality sinks in

Insurance Regulatory Authority CEO Godfrey Kiptum. FILE PHOTO | NMG

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Summary

  • Onset of the pandemic in Kenya early last year saw many underwriters reject Covid-related claims, only for them to realise that the contracts they had with customers had no exclusions.
  • The Insurance Regulatory Authority (IRA) said insurers are responding by rewording clauses in contracts signed with customers to clear the air on what is not included in the policies.

Insurers are reviewing clauses in their contracts to reduce potential conflict with customers after Covid-19 pandemic exposed them to unforeseen claims.

Onset of the pandemic in Kenya early last year saw many underwriters reject Covid-related claims, only for them to realise that the contracts they had with customers had no exclusions.

The Insurance Regulatory Authority (IRA) said insurers are responding by rewording clauses in contracts signed with customers to clear the air on what is not included in the policies.

“Insurers are now more careful on how they word their contracts and including clauses on pandemics and epidemics to avoid disappointing customers,” Mr Godfrey Kiptum, authority chief executive, said yesterday.

Speaking in Nairobi during the fourth UNEP-PSI (Principles of Sustainable Insurance) forum, Mr Kiptum said many insurers had tried to cite exclusions to push away customers when Covid-19 struck.

“But we found out that there were no exclusions in those contracts and insurers have had to pay albeit with difficulties,” Mr Kiptum said.

By june last year, insurance companies had paid Sh108.2 million on Covid-19 death claims, just two months after the disease was reported in Kenya mid-March.

Medical insurers will from next month also be forced to foot Covid-19 vaccination bills for policy holders after the regulator directed them to update their policies.

The UNEP-PSI forum was convened to discuss what insurers can do to ensure they adopt practices that embed their business models to Sustainable Development Goals.

Insurers had initially told clients they were not going to pay any claims related to the pandemic, but later softened their stance even as pressure mounted on underwriters worldwide to support clients.

To avoid future arguments with customers, insurers are simplifying the wording of their contracts and stating openly what is covered or excluded in order to cultivate trust between them and their clients.

ICEA Lion Life Assurance chief executive George Nyakundi said during a panel discussion on the impact of the coronavirus on underwriters that Covid-19 has disrupted the way contracts will be structured going forward.

“The contracts we used in the past have been impacted and we need to rethink about it to address inclusivity and sustainability of insurance,” Mr Nyakundi said.

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