BANKS have not adopted the right model insurance of leading to conflicts with insurance agents,
The lending institutions have recently waded into a war with insurance middlemen over reports that banks coerce customers to buy covers from specific underwriters under their bancassurance business arms when they seek loans.
Bancassurance is when banks and insurance companies team up, enabling the underwriters to sell covers to a lender's clients. It was recently adopted in the country to increase penetration of insurance services in the market amid a low uptake rate of three per cent.
However, the AKI boss said banks that are currently selling insurance in the country have not adopted the right model of bancassurance since "they are sitting and waiting for customers to come looking for loans then coerce then to take cover with an insurer they are affiliated to."
Gichuhi noted that because of using the wrong model, bancassurance has only managed to contribute a measly one per cent of all new business recorded by the industry.
"Even a recent requirement by CBK (
Last month, insurance agents body -
The association accused banks of distorting the insurance market by their actions adding that they are not entirely following the rules on bancassurance.
Gichuhi said banks should set up autonomous departments within their operations for bancassurance to address the problem. He also advocated for dialogue between insurance stakeholders and banks to resolve the matter.
"Mediation over this issue can only be done between banks and association of both brokers and agencies."
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