Kenya Subsidiary Legislation, 2020 181

LEGAL NOTICE No. 24

THE INSURANCE ACT
(Cap. 487)
THE INSURANCE (BANCASSURANCE) REGULATIONS, 2020
IN EXERCISE of the powers conferred by section 180 of the
Insurance Act, the Cabinet Secretary for the National Treasury and
Planning makes the following regulations —
1. These guidelines may be cited as the Insurance Citation.
(Bancassurance) Regulations, 2020.
2. In these regulations, unless the context requires— Interpretation.
"bancassurance business" means an intermediary business that
involves collaboration between a bank, a microfinance bank or a
financial institution, and an insurance company to market and distribute
insurance products;
"bancassurance intermediary" means a person registered to carry
out bancassurance business; and
"microfinance bank" has the meaning assigned to it in the No. 19 of 1996.
Microfinance Act, 1996.
3. These regulations shall apply to bancassurance Scope of the
intermediaries. regulations.

4. The objective of these regulations is to provide for the Objective of the

registration of bancassurance intermediaries and supervision of regulations.
bancassurance business.
5. A person who intends to carry on Bancassurance business Application for
shall — bancassurance
business.
(a) be incorporated in Kenya;
(b) wholly owned by a bank, microfinance bank or other
financial institution regulated in Kenya;
(c) apply in writing to the Authority to be registered as a
bancassurance intermediary;
(d) have a minimum paid up capital of five million shillings;
(e) have at all times a minimum of ten million shillings in the
form of—
(i) a bank guarantee as set out in the First Schedule hereto:
Provided that the bank, microfinance bank or financial
institution owning the applicant shall not provide the
guarantee; or
(ii) a Government bond with a maturity of at least two years
issued by the Central Bank of Kenya in favour of the
Authority; and
(f) meet any other requirements that may be prescribed by the
Act or these regulations.
 182 Kenya Subsidiary Legislation, 2020

6. An application for registration as a bancassurance Registration

intermediary shall be accompanied by — requirements.

(a) an application fee of twenty thousand shillings;

(b) a collaboration agreement with any insurer whose products
the applicant intends to market or distribute;
(c) a bancassurance business plan;
(d) a letter of no objection from the regulator of the bank,
microfinance bank or financial institution;
(e) a written application for approval of the principal officer of
the applicant; and
(f) constitutive documents including a certificate or registration
or certificate of incorporation.
7. (1) A person registered as a bancassurance intermediary shall Market conduct
act as an insurance intermediary and shall not — by bancassurance
intermediaries.
(a) undertake or engage in the business of the underwriting of
risks or engaging in any other insurance business and
(b) give the impression of being the underwriter of the insurance
products it is marketing or distributing on behalf of the
insurer on whose behalf it is acting as a bancassurance
intermediary.
(2) All bancassurance advertisements by the bancassurance
intermediary shall prominently display or mention the name of the
insurer underwriting the product.
8. A bancassurance intermediary shall ensure that the product is Insurance
in the name of the underwriter and shall disclose to its customers that products to be in
the name of the
the insurer shall be responsible for the settlement of claims relating to underwriter.
the insurance product.
9. A bancassurance intermediary shall ensure that the bank, Debiting of client
microfinance bank or financial institution does not debit the client's accounts.
bank accounts for premiums without the prior written authority or
consent of the operator of the account held at the bank, microfinance
bank or financial institution.
10. A bancassurance intermediary shall— Role of
bancassurance
intermediaries.
(a) inform in writing a customer that the customer has the right
to select any underwriter from among the underwriters
licensed by the Authority;
(b) not advise or coerce a customer to cancel an existing policy
from an underwriter licensed by the Authority; and
(c) not infringe on the freedom of the customer to use any other
bancassurance intermediary of his or her choice or to directly
deal with an underwriter.
11. A bancassurance intermediary shall only distribute products Distribution of
products.
approved by the Authority.
 Kenya Subsidiary Legislation, 2020 183

12. A bancassurance intermediary shall ensure the confidentiality Confidentiality of

of consumer data and information. information.

13. A bancassurance intermediary shall develop and implement a Complaints

complaints redress mechanism to address any complaints from its redress
mechanism.
customers.
14. (1) A bancassurance intermediary shall submit to the Reporting
Authority an annual report on the performance of the bancassurance requirements.
business activities in the form set out in the Second Schedule hereto
(2) The report under paragraph (1) shall be submitted within three
months after the end of the year to which it relates.
15. A bancassurance intermediary shall ensure that technical Technical staff.
staff handling insurance matters possess at least a certificate of
proficiency in insurance.
16. A Principal Officer of a bancassurance intermediary shall — Qualifications of
principal officer.
(a) be fit and proper as prescribed by the Act;
(b) hold a technical or professional qualification in insurance,
actuarial, accounting, banking or such other qualification as
may be prescribed by the Commissioner; and
(c) be approved by the Commissioner.
17. A bancassurance intermediary shall have a board of directors Governance of a
of at least three members possessing diverse qualifications and skills bancassurance
intermediary.
who shall oversee its operation.
18. The principal officer of a bancassurance intermediary shall Reporting by
report to the board of directors of the bancassurance intermediary and principal officers.
shall be an ex officio member of the board without the right to vote
during the meetings of the board.
19. A bancassurance intermediary shall not be registered or have Disqualification
its registration renewed if — or cancellation of
registration.
(a) the applicant or any of its directors has, within a period of
five years preceding the date of the application, been
convicted of an offence involving fraud or dishonesty;
(b) the applicant or any of its directors has, within a period of
five years preceding the date of the application become
insolvent or compounded with its creditors;
(c) the principal officer or the applicant's staff do not have
sufficient knowledge, skill or experience to satisfactorily
discharge their functions; or
(d) the applicant or any of its directors has been found convicted
of, or warned or cautioned in writing by the Commissioner
on at least three occasions with regard to, unethical business
practices.
 184 Kenya Subsidiary Legislation, 2020

20. Where a bancassurance intermediary breaches any provision Penalty for

of these regulations, the bancassurance intermediary shall be liable to a violation.
penalty of twenty thousand shillings for each day or part thereof during
which the violation continues, which shall be payable to the
Policyholders Compensation Fund.
21. A bancassurance intermediary in operation immediately Transitional
before the commencement of these regulations shall comply with the matters.
requirements of regulations 5,7 and 17 within one year from the date of
such commencement.
 'ubsidiary Legislation, 2020 185

FIRST SCHEDULE (r. 5 (e))

FORM OF GUARANTEE
1
(Name of Bank)

in this Guarantee referred to as "the Bank" hereby guarantees to the Commissioner

of Insurance (in this Guarantee referred to as the Commissioner) that in the event of
any insurance client of

(Name of the Bancassurance Intermediary)

this guarantee (referred to as the Bancassurance) or any insurance company

obtaining, while this Guarantee is in force, a court decree in respect of unsatisfied
debts of the Bancassurance to the insurance client or the insurance company, as the
case may be, in respect of insurance business, which debt the client or the insurance
company is unable to recover in any other way, the Bank will pay on demand to the
order of the Commissioner the sum of

(Amount of guarantee)

2. This Guarantee is a continuing Guarantee and may be revoked —

(a) with the consent in writing of the Commissioner; or

(b) after the expiration of twelve months after notice in writing of the intention of the
Bank to revoke this Guarantee has been given to the Commissioner.

3. The revocation of this Guarantee does not release the Bank from, or affect, any
liability of the Bank under this Guarantee existing immediately before the
revocation.

Dated the 20
THE SEAL OF WAS Al-NIXED
TO THIS GUARANTEE BY
IN THE PRESENCE OF
 186 Kenya Subsidiary Legislation, 2020

SECOND SCHEDULE (r. 14( I))

STATEMENT OF BUSINESS OF A BANCASSURANCE INTERMEDIARY
Name of Bancassurance Intermediary All amounts in Kenya
Shillings
Year ending 31st
December, 20....
Insurance Business Number Number Total Total Largest
Insurers policies commission premium percentage
(1) (2) earned (3) under commission
the from any
policies one insurer
placed (5)
(4)
Long-Term Direct

TOTAL

General Insurance-
Direct

TOTAL

TOTAL

Date Principal Officer

Dated the 7th February, 2020.
UKUR YATANI,
Cabinet Secretary,
for National Treasury and Planning.