Becoming An Insurance Broker: Navigating The Kenyan Path

If you want to become an insurance broker in Kenya, you'll need to register your business and obtain a licence from the Insurance Regulatory Authority, guided by the Insurance Act. The registration requirements for insurance brokers are detailed in Section 150 to section 156 of the Insurance Act Cap 487 of the Laws of Kenya. This includes paying a registration fee of KES. 10,000, providing a bank guarantee or government bond, and obtaining a Professional Indemnity Insurance Policy, among other things. Once you have your licence, you can start working as an insurance broker, either independently or through an organisation, to help clients select insurance coverage.

Registration requirements

The registration requirements for insurance brokers in Kenya are detailed in Sections 150 to 156 of the Insurance Act Cap 487 of the Laws of Kenya. The following is a list of requirements that must be met:

• A registration fee of KES. 10,000, paid to the Insurance Regulatory Authority.
• A bank guarantee of KES. 3 million from a commercial bank or a government bond of at least two years in favour of the Authority.
• A Professional Indemnity Insurance Policy with a minimum limit of KES. 10 million, expiring on 31st December of the registration year.
• A minimum paid-up share capital of KES. 1 million.
• A CR-12 form detailing the shareholding structure of the company.
• At least 60% of the shares must be held by Kenyan citizens.
• The registered name of the applicant should comply with Section 190 of the Insurance Act Cap 487.
• A certified copy of the certificate of incorporation.
• New applicants should submit a 3-year business plan.
• All directors must submit identification documents and duly completed fit and proper forms.
• An auditor's certificate of separation of accounts must be submitted by the applicant.
• The applicant should submit the following with respect to the Principal Officer:
• Curriculum Vitae and testimonials.
• A degree or diploma in insurance from a recognised institution.
• Evidence of at least five years of experience in the insurance business.
• Identification documents (National ID card or passport).
• An appointment letter, where applicable.
• Duly completed fit and proper form.
• Resident status of the Principal Officer.
• A work permit valid for at least two years, for foreigners.

The Insurance Regulatory Authority is responsible for licensing and regulating the insurance industry in Kenya, guided by the Insurance Act.

Licensing and regulation

The insurance industry in Kenya is licensed and regulated by the Insurance Regulatory Authority (IRA), which is guided by the Insurance Act. The IRA deploys significant resources in monitoring market behaviours, compliance and solvency issues.

To become a licensed insurance broker in Kenya, you must meet the registration requirements detailed in Section 150 to section 156 of the Insurance Act Cap 487 of the Laws of Kenya. These requirements include:

• Registration fee of KES. 10,000 payable to the Insurance Regulatory Authority.
• Bank guarantee of KES. 3 million from a commercial bank or a Government bond of at least two years in favour of the Authority.
• A Professional Indemnity Insurance Policy with a minimum limit of KES. 10 million.
• Minimum paid-up share capital of KES. 1 million.
• CR-12 form detailing the shareholding structure of the company.
• At least 60% of the shares must be held by Kenyan citizen(s).
• The registered name of the applicant should be in line with section 190 of the Insurance Act Cap 487.
• A Certified copy of the certificate of incorporation.
• New applicants should submit a 3-year business plan.
• All Directors should submit Identification Documents and duly completed fit and proper forms.
• The applicant should submit an Auditor’s certificate of separation of accounts and an Appointment letter where applicable.
• The Principal Officer must submit a Curriculum Vitae and Testimonials, a degree or diploma in insurance from a recognised institution, evidence of at least five years of experience in the insurance business, Identification documents, and a duly completed fit and proper form.

In addition to the above requirements, insurance brokers in Kenya must also adhere to the regulations set forth by the IRA, which include guidelines for online registration, printing of licences, and circulars to brokers.

It is important to note that insurance brokers are required to have a licence to operate, and the specific requirements may vary depending on the state or country in which they are based. Therefore, it is essential to refer to the IRA for the most up-to-date and comprehensive information regarding licensing and regulation for insurance brokers in Kenya.

Education and training

The educational requirements to become an insurance broker in Kenya are not extensive. A high school diploma or minimal post-secondary coursework is typically sufficient. However, pursuing a post-secondary education, such as an associate or bachelor's degree, can provide a solid background of knowledge and enhance your resume. Common degree programs relevant to insurance brokers include business administration and communications. Some institutions also offer degrees specifically in insurance and risk management.

In Kenya, the College of Insurance offers a Certificate of Proficiency (COP) examination for Insurance Agents, which is required for registration as an insurance broker. This examination assesses your knowledge and understanding of the insurance industry.

To further enhance your credentials, you may consider pursuing optional certifications offered by the National Alliance for Insurance Education and Research. These certifications include areas such as counselling, service representative, risk manager, and financial planner. Obtaining these certifications typically requires a combination of experience, coursework, and exams.

While not mandatory, gaining industry-specific knowledge through a degree or certification can increase your competitiveness in the job market and provide a strong foundation for your career as an insurance broker.

In addition to formal education, developing strong communication and analytical skills will be beneficial. Insurance brokers need to effectively communicate with clients to understand their needs and present different insurance options. Analytical skills are crucial for assessing client needs, evaluating risks, and determining the most suitable insurance policies.

Once you've decided on your educational path, it's important to stay updated with industry developments and continue learning throughout your career. The insurance industry is dynamic, and staying informed about new products, regulations, and market trends will help you provide the best service to your clients.

Specialising

Once you have decided on your education path, the next step is to choose a specialty. There are many different types of insurance, also called "lines of authority," that you can choose to sell as a broker. These include:

• Casualty insurance, which covers areas not covered by life, health, or property insurance. The most common example is workers' compensation.
• Property insurance, which provides coverage for damage and theft for people who own or rent a building.
• Liability insurance, which protects you if you are responsible for someone else's injuries or property damage.
• Accident insurance, which covers injuries resulting from accidents and often specifies the types of accidents covered in the chosen policy.
• Health insurance, which covers the costs of medical needs, with different policies specifying the type of coverage provided.
• Life insurance, where a company agrees to pay a set sum to a beneficiary upon the policy owner's death.
• Disability insurance, which provides a set income when a person's disability prevents them from performing the core functions of their regular work.
• Commercial insurance, which allows business owners to protect their business assets, for example, by providing coverage for building damage or loss of products due to transportation accidents.
• Automotive insurance, which protects against damages to your vehicle, covers expenses for passengers, and covers damage to other vehicles if you are at fault for an accident.
• Home insurance, which protects homeowners, their families, and their properties in the event of damage, theft, or other incidents inside the home.
• Pet insurance, which functions similarly to health insurance but for animals.

Certification

The process of becoming a certified insurance broker in Kenya involves meeting specific educational and licensure requirements. While the specific steps may vary depending on your circumstances and the state in which you reside, here is a comprehensive guide to help you navigate the certification process.

Firstly, it is important to note that insurance brokers in Kenya are required to register with the Insurance Regulatory Authority, adhering to the provisions outlined in the Insurance Act Cap 487 of the Laws of Kenya. The registration requirements for insurance brokers are detailed in Sections 150 to 156 of the aforementioned legislation. Key registration requirements include a registration fee, a bank guarantee or government bond, a professional indemnity insurance policy, minimum share capital, submission of various documents such as identification and business plans, and compliance with citizenship requirements.

In terms of educational prerequisites, most states mandate a high school diploma or minimal post-secondary coursework. However, pursuing a post-secondary education, such as an associate or bachelor's degree, can significantly enhance your knowledge, resume, and employment prospects. Relevant degree programs include business administration and communications. Additionally, some institutions offer specialised degrees in insurance and risk management.

To further enhance your credentials and employability, you may consider pursuing optional certifications offered by the National Alliance for Insurance Education and Research. These certifications, such as counselling, service representative, risk manager, and financial planner, require a combination of experience, coursework, and examinations.

It is important to note that all states in Kenya require insurance brokers to be licensed. The pre-licensure requirements vary from state to state, but typically involve minimum hours of coursework in specific insurance fields. Some states, like California and Florida, may also mandate fingerprinting, background checks, and specific numbers of classroom hours in ethics and insurance-related subjects.

Once you have fulfilled the pre-licensure requirements, you can proceed to schedule and take the licensing exam, which typically incurs a fee. Most states facilitate exam preparation through short-term courses. After successfully passing the exam, you can apply for the qualifying license by submitting the necessary documentation and paying the associated fees.

Frequently asked questions