Point in Time
Act No: CAP. 487
Act Title: INSURANCE
[ Date of commencement: 1st January, 1987. ]
[ Date of assent: 8th January, 1985. ]
Subsidiary Legislation
Arrangement of Sections
PART I – PRELIMINARY
1.
Short title

This Act may be cited as the Insurance Act.
2.
Interpretation
(1)

In this Act, unless the context otherwise requires—

"actuary" means—

(a)

a Fellow of the Institute of Actuaries in England or of the Faculty of Actuaries in Scotland or of the Society of Actuaries of the United States of America; or
(b)

such other person having actuarial knowledge as the Commissioner may, on the application of a member of the insurance industry, approve;

"admitted asset" deleted by Act No. 22 of 2017, s. 2(a);

"admitted liability" deleted by Act No. 22 of 2017, s. 2(a);

"Advisory Board" deleted by Act No. 11 of 2006, s. 2(a);

"affairs", in relation to a person or to a person associated with another person, includes—

(a)

the promotion, formation, membership, control, trading, dealings, business and property of the person;
(b)

the ownership of shares in, debentures of and interests made available by the person;
(c)

matters concerned with the ascertainment of the persons who are or have been financially interested in the success or failure, or apparent success or failure, of the person or are or have been able to control or to influence materially the policy of the person; and
(d)

the circumstances under which a person acquired or disposed of, or became entitled to acquire or dispose of, shares in, debentures of or interests made available by the person;

"agent" means a person, not being a salaried employee of an insurer who, in consideration of a commission, solicits or procures insurance business for an insurer or broker;

"appointed date" means the date specified in section 1 for the coming into force of this Act;

"assessment report" means any report in respect of a claim;

"asset" includes any property, security, item or interest of a person;

"auditor" has the meaning assigned to it under section 3(1) of the Companies Act (Cap. 486);

"Authority" means the Insurance Regulatory Authority established by section 3;

"bank" has the meaning assigned to it in the Banking Act (Cap. 488);

"Board" means the Board of Directors of the Authority constituted under section 3B;

"bond investment business" deleted by Act No. 28 of 2019, s. 2(a)(i);

"broker" means an intermediary involved with the placing of insurance business with an insurer or reinsurer for or in expectation of payment by way of brokerage commission for or on behalf of an insurer, policyholder or proposer for insurance or reinsurance and includes a medical insurance provider;

"Cabinet Secretary" means the Cabinet Secretary for the time being responsible for the National Treasury;

"capital adequacy ratio" means a measure of the available capital in relation to the required capital;

"certified" means certified by a principal officer to be true and correct, a true copy or a correct translation (as the case may be) by endorsement on or attached to the document to be certified;

" Chairperson" means the person for the time being presiding over the Board of Directors or other governing body of the member of the insurance industry;

"child’s advancement policy" means a policy effected, before a child has attained the age of eighteen years, by a person other than the child, which contains both of the following provisions—

(a)

provision for payment of a sum not exceeding the premiums paid and accumulated with interest to the executors, administrators or assigns of the child on his death before attaining the vesting age;
(b)

provision for payment of a sum to the child or his assigns on his attaining an age not less than the vesting age;

"claims settling agent" means a person who engages in the business of settling or negotiating insurance claims under policies issued by insurers whether in Kenya or outside Kenya;

"Commissioner" means the officer appointed under section 3E;

"Company" means the Kenya Reinsurance Corporation Limited;

"contract of insurance" includes a contract of reinsurance;

"Corporation" repealed by Act No. 7 of 1997, s. 13;

"court" means the High Court;

"dependent", in relation to a company, means—

(a)

that another company, either alone or with any associate, is entitled to exercise or control the exercise of one-third or more of the voting power at any general meeting of the first-mentioned company; or
(b)

that the first-mentioned company is a dependent of a company which is that other company’s dependent;

"director" means a person occupying the position of a director by whatever name he may be called;

"document" includes accounts, deeds, letters, writings, books and any other records of information, however compiled, recorded or stored and whether in written or printed form, on microfilm or in any other form;

"financial institution" has the meaning assigned to it in the Banking Act (Cap. 488) and includes a mortgage finance company within the meaning of that Act;

"financial year" means the calendar year;

"general insurance business" means insurance business of any class or classes not being long term insurance business;

"gross direct premium" means the premium after deductions of discounts, refunds and rebates of premium written by an insurer excluding any reinsurance premium accepted and before deduction of—

(a)

any premium payable in respect of mandatory cessions falling under section 145 of this Act;
(b)

any other reinsurance premium ceded;

"gross liability" means liability before deducting any part of it which is re-insured;

"gross premium" means the premium after deduction of discounts, refunds and rebates of premium but before deduction therefrom of any premium paid or payable by an insurer for reinsurance ceded, and includes premiums receivable by the insurer under reinsurance contracts accepted by the insurer;

"group life insurance and group business" means insurance on the lives of groups of persons formed for purposes other than that of purchasing a group life insurance policy;

"index-based insurance" means an insurance contract—

(a)

under which the liability of the insurer to make a payment to the policyholder is triggered by, and the amount of that payment is determined in accordance with, one or more indices, rather than on an assessment of the policyholder's actual loss; and
(b)

where the payment is designed to provide a level of compensation, although not necessarily an indemnity, to the policyholder in respect of either or both of the following—

(i)

losses, including consequential losses, that the policyholder is expected to suffer; or
(ii)

costs, including mitigation costs, that the policyholder is expected to incur, in the event that payment is triggered by the index;

"industrial life assurance business" deleted by Act No. 28 of 2019, s. 2(a) (ii);

"insurance business" means the business of undertaking liability by way of insurance (including reinsurance) in respect of any loss of life and personal injury and any loss or damage, including liability to pay damage or compensation, contingent upon the happening of a specified event, and includes—

(a)

the effecting and carrying out by a person not carrying on a banking business, of contracts for fidelity bonds, performance bonds, administration bonds, bail bonds or customs bonds or similar contracts of guarantee, being contracts effected by way of business (and not merely incidental to some other business carried out by the person effecting them) in return for the payment of one or more premiums;
(b)

the effecting and carrying out, by a body (not being a body carrying on a banking business) that carries on business which is insurance business apart from this paragraph, of capital redemption contracts;
(c)

the effecting and carrying out of contracts to pay annuities on human life;
(d)

takaful insurance business based on group participation guaranteeing each of the members against defined loss or damage;
(e)

micro-insurance business;
(f)

social insurance schemes;

and any business incidental to insurance business as so defined but does not include—

(i) business in relation to the benefits provided by a friendly society or trade union for its members or their dependants;
(ii) business in relation to the benefits provided for its members or their dependants by an association of employees;
(iii) deleted by Act No. 9 of 2003, s. 2;
(iv) business in relation to a scheme or arrangement for the provision of benefits consisting of— and no other benefits, except benefits incidental to the scheme or arrangement;
(v) business consisting of the effecting and carrying out, by a person carrying on no other insurance business, of contracts of such description as may be prescribed, being contracts under which the benefits provided are exclusively or primarily benefits in kind;
(vi) business declared by the Cabinet Secretary by notice in the Gazette not to be insurance business for the purposes of this Act;

"insurance group" includes a registered insurer and its a subsidiary, or an insurer's holding company, whether operating or non-operating, and its subsidiary;

"insurance surveyors" means a person who engages in surveying risks and in advising on the rate and terms and conditions of premiums including making suggestions for improvement of the risks; and, in the marine insurance business, includes a person who surveys or assesses the losses on behalf of the insured;

"Insurance Training and Education Trust" means the Insurance Training and Education Trust declared as such by instruments of the trustees dated 3rd May, 1988;

"Insurance Training Levy" means the insurance training levy payable under section 197H;

"Insurance Premium Levy" means the insurance premium levy payable under section 197A;

"insurer" means a person, registered under this Act, who carries on insurance business and includes a reinsurer;

"intermediary" means a person who in the course of any business or profession invites other persons to make offers or proposals or to take other steps with a view to entering into contracts of insurance with an insurer, but does not include a person who merely publishes invitations on behalf of, or to the order of, some other person;

"investigator" means the Commissioner or an investigator appointed under section 9;

"Kenya business" and "Kenya reinsurance business" means insurance business carried on by an insurer in respect of any person, human life, property or interest situated in Kenya, or in respect of which premiums are ordinarily payable in Kenya and include insurance business in respect of any vessel, hovercraft or aircraft registered or ordinarily located in Kenya and includes marine cargo insurance policies on all imports entering Kenya, including marine cargo insurance policies for commercial imports, but excludes marine cargo insurance policies issued on personal effects, goods and items imported into Kenya by returning residents or passengers entering Kenya for permanent or temporary residence;

"Kenya Government securities" means securities charged on the revenue of the Government or guaranteed fully as regards principal and interest by the Government;

"Kenya Reinsurance Corporation" repealed by Act No. 7 of 1997, s. 13;

"Kenya Reinsurance Corporation Limited" has the meaning assigned to it in section 2 of the Kenya Reinsurance Corporation Act (Cap. 487A);

“licensing” means authorization under this Act to transact insurance business and includes renewal of licenses;

"life assurance" and "life assurance business" mean the business of, or in relation to, the issuing of, or the undertaking of liability to pay money on death (not being death by accident or specified sickness only) or on the happening of any contingency dependent on the termination or continuance of human life (either with or without provision for a benefit under a continuous disability insurance contract), and include a contract which is subject to the payment of premiums for a term dependent on the termination or continuance of human life and any contract securing the grant of an annuity for a term dependent upon human life;

"long term insurance business" includes insurance business of all or any of the following classes—

(a)

life assurance;
(b)

annuities;
(c)

pensions (personal pension or deposit administration);
(d)

group life;
(e)

group credit;
(f)

permanent health;
(g)

investment (unit link and linked investments or non-linked investments), and

includes, in relation to any insurer, business carried on by the insurer as incidental to any such class of insurance business;

"loss adjuster" and "loss assessor" mean persons who do the business of assessing, investigating, negotiating and settling losses on behalf of the insurer or the insured;

"management expenses" means expenses incurred in the administration of an insurer which are not commission payable and, in the case of general insurance business, are not included in claims paid, claims outstanding, expenses for settling claims and expenses for settling claims outstanding;

"managing agent" means a person, firm or company entitled to the management of the whole affairs of an insurer, by virtue of an agreement with the insurer, and under the control and direction of the directors except to the extent, if any, otherwise provided for in the agreement, and includes a person, firm or company occupying that position, by whatever name called;

"medical insurance provider" means an intermediary, other than a broker, concerned with the placing of medical insurance business with an insurer for, or in expectation of, payment by way of a commission, fee or other remuneration;

"micro-insurance business" means insurance that is accessed by or accessible to the low income population, including the underserved markets provided by a variety of different entities and managed in accordance with generally accepted insurance principles;

"member of the insurance industry" includes an insurer, reinsurer, broker, agent, insurance surveyor, risk manager, loss assessor, loss adjuster and claims settling agent, whether registered under this Act or not;

"net liability" means the liability assessed by an actuary at a valuation made by him and approved by the Commissioner;

"net premium" means the balance of the gross premium after deduction therefrom of any premium paid or payable by the insurer for reinsurance ceded;

"non-operating holding company" means a company, other than the insurer, which has control of an insurer and whose activities are limited to—

(a)

holding investments in its subsidiary;
(b)

holding property used by group members;
(c)

raising funds to—

(i)

invest in, or to provide support to its subsidiary;
(ii)

conduct its own activities;
(iii)

provide administrative functions to;
(iv)

support risk management; and
(v)

provide financial services for efficient operation of the group.

"ordinary life assurance business" means life assurance business, being business of, or in relation to, the issuing of, or the undertaking of liability under, ordinary life policies;

"ordinary life policy" means a policy of life assurance other than a policy of industrial life assurance;

"person" includes a company, corporate body (whether incorporated by or under statute or statutory authority), association, association of underwriters, fund, natural person, partnership and scheme;

"policy"—

(a)

in relation to ordinary life assurance business or industrial life assurance business, includes an instrument evidencing a contract to pay an annuity upon human life;
(b)

in relation to bond investment business, includes a bond, certificate, receipt or other instrument evidencing the contract with insurer; and
(c)

in relation to other classes of business, includes an instrument under which there is for the time being an existing liability already accrued or under which any liability may accrue;

"policy-holder" means the person who for the time being is the legal holder of the policy for securing the contract with the insurer;

"premium" includes the consideration for the granting of an annuity;

"principal officer" means an officer appointed under section 68;

"registration" deleted by Act No. 10 of 2023, Sch.

"regulations" and "rules" mean regulations and rules made under this Act;

"reinsurer" means a person who carries on reinsurance business and includes a retrocessionaire;

"reinsurance business" means the business of undertaking liability to pay money to insurer or reinsurers in respect of contractual liabilities in respect of insurance business incurred by insurers or reinsurer and includes a retrocession;

"related", in relation to an insurer, means—

(a)

a dependant of that insurer;
(b)

a company of which the insurer is a dependant; or
(c)

a dependant of a company of which the insurer is a dependant;

"retrocession" means the reinsurance of reinsurance business accepted by a reinsurer;

"retrocessionaire" means a person reinsuring a reinsurer;

"risk manager" means a person, his clients or employer with regard to a programme of minimizing losses arising through unforeseen events, and of minimizing the cost of such protection by physical or financial measures through insurance or any other means;

"significant owner" means a person who directly or indirectly holds more than ten percent of the controlling or beneficial interest in a person licenced under this Act;

"statutory fund" means the fund established under section 45;

"subsidiary" means a subsidiary company as defined by section 4 of the Companies Act (Cap. 486);

"tax" deleted by Act No. 11 of 2006, s. 2(b);

"Tribunal" means the tribunal established under section 169;

"vesting age" means—

(a)

the age of eighteen years; or
(b)

an age of not less than ten years on or after the attainment of which by the child it is specified in the policy that sums payable in respect of the policy by the insurer who issued it shall be paid to the child or his executors, administrators or assigns.
(2)

An insurer shall be deemed to be carrying on business of a particular class so long as any liability in respect of that class of business remains unsatisfied and is not otherwise provided for, and shall be subject to all the provisions of this Act, save as is specifically provided in any other section thereof, in relation to that class of business.

[Act No. 18 of 1986, Sch., Act No. 12 of 1987, s. 2, Act No. 9 of 1989, Second Sch., Act No. 20 of 1989, Sch., Act No. 7 of 1997, s. 13, Act No. 4 of 1999, s. 72, Act No. 9 of 2003, s. 2, Act No. 11 of 2006, s. 2, Act No. 57 of 2012, s. 31, Act No. 1 of 2014, s. 2, Act No. 14 of 2015, Act No. 19 of 2015, s. 31, Act No. 50 of 2016, s. 2, Act No. 11 of 2017, Sch., Act No. 22 of 2017, s. 2, Act No. 11 of 2019, s. 2, Act No. 28 of 2019, s. 2 (a)(b), Act No. 8 of 2021, s. 55, Act No. 10 of 2023, Sch.]
PART II – THE INSURANCE REGULATORY AUTHORITY

[Act No. 11 of 2006, s. 3.]

3.
Establishment of the Authority
(1)

There is established an Authority to be known as the Insurance Regulatory Authority.
(2)

The Authority shall be a body corporate with perpetual succession and a common seal and shall in its corporate name be capable of—

(a)

suing and being sued;
(b)

taking, purchasing or otherwise acquiring, holding, charging or disposing of movable or immovable property;
(c)

borrowing or lending money; and
(d)

doing or performing all other things or acts for the furtherance of its functions under the provisions of this Act, which may be lawfully done or performed by a body corporate.

[Act No. 11 of 2006, s. 4.]
3A.
Objects and functions of the Authority
(1)

The objects and functions of the Authority shall be to—

(a)

ensure the effective administration, supervision, regulation and control of insurance and reinsurance business in Kenya;
(b)

formulate and enforce standards for the conduct of insurance and reinsurance business in Kenya;
(c)

license all persons involved in or connected with insurance business, including insurance and reinsurance companies, insurance and reinsurance intermediaries, loss adjusters and assessors, risk surveyors and valuers;
(d)

deleted by Act No. 1 of 2014, s. 3;
(e)

deleted by Act No. 1 of 2014, s. 3;
(f)

advise the Government on the national policy to be followed in order to ensure adequate insurance protection and security for national assets and national properties;
(g)

issue supervisory guidelines and prudential standards from time to time, for the better administration of the insurance business of persons licensed under this Act;
(h)

conduct inquiries and share information with other regulatory authorities and to carry out any other related activities in furtherance of its supervisory role;

(ha)

educate the public regularly on the right to independently select an underwriter or broker from a list of underwriters or brokers licensed by the Authority;
(hb)

regulate the business of bacc assurance offered by banks in the same manner as the ordinary insurance business including capital requirements and disclosures;
(i)

undertake such other functions as may be conferred on it by this Act or by any other written law.
(2)

For better clarity, the objects of the supervision of insurers and reinsurers by the Authority under this Act shall be—

(a)

to promote the maintenance of a fair, safe and stable insurance sector;
(b)

to protect the interest of the insurance policyholders and beneficiaries; and
(c)

generally to promote the development of the insurance sector.
(3)

The Authority shall publish the standards formulated under subsection (1) (b) and may provide for the punishment of a person who contravenes any of the standards by a fine not exceeding five million shillings or to imprisonment for a term not exceeding five years or to both such fine and imprisonment.

[Act No. 11 of 2006, s. 4, Act No. 10 of 2010, s. 51, Act No. 57 of 2012, s. 32, Act No. 1 of 2014, s. 3, Act No. 11 of 2017, Sch.]
3AA.
Assistance in investigation
(1)

The Authority may, where it receives a request from a regulatory body, whether established within or outside Kenya, for assistance in investigating a person specified by the regulatory body who has contravened or is contravening any legal or regulatory requirements which—

(a)

are enforced or administered by that regulatory body; or
(b)

relate to insurance transactions regulated by that regulatory body,

and where it is of the opinion that the request meets the requirements of subsection (3), provide the assistance requested for by exercising any of its powers under this Act or by providing such other assistance as the Authority may consider necessary.
(2)

For the purposes of subsection (1), the provisions of this Act shall, with such modifications as may be necessary, apply and have effect as if the contravention of the legal or regulatory requirement referred to in subsection (1) were an offence under this Act.
(3)

A regulatory body which requests for assistance under subsection (1) shall demonstrate that—

(a)

it is desirable or expedient that the assistance requested should be provided in the interest of the public; or
(b)

the assistance shall assist the regulatory body in the discharge and performance of its functions.
(4)

The Authority shall, in deciding whether the requirements under subsection (3) have been satisfied in a particular case, take into account whether the regulatory body shall—

(a)

pay the Authority any of the costs and expenses incurred in providing the assistance; and
(b)

be able and willing to provide reciprocal assistance within its jurisdiction in response to a similar request for assistance from Kenya.
(5)

Nothing in this section shall be construed as limiting the powers of the Authority to co-operate or co-ordinate with any other regulatory body in the exercise of its powers under this Act, in so far as any such co-operation or co-ordination is not contrary to the objectives of this Act.

[Act No. 1 of 2014, s. 4.]
3B.
Board of Directors
(1)

The management of the Authority shall vest in the Board of Directors of the Authority which shall comprise—

(a)

a Chairperson to be appointed by the President on the recommendation of the Cabinet Secretary;
(b)

the Commissioner of Insurance appointed under section 3E;
(c)

the Principal Secretary in the Ministry for the time being responsible for matters relating to finance or his representative;
(d)

the Chief Executive Officer of the Retirement Benefits Authority;
(e)

the Chief Executive Officer of the Capital Markets Authority;
(f)

the Governor of the Central Bank of Kenya or his representative;
(g)

a nominee of the Insurance Institute of Kenya; and
(h)

four other members, not being public officers, appointed by the Cabinet Secretary.
(2)

The chairperson and every member appointed under paragraph (a), (g) or (h) of subsection (1) shall be appointed from amongst persons who have knowledge or experience in matters relating to insurance, finance, banking or actuarial science.
(3)

A person shall not be eligible for appointment under paragraph (a), (g) or (h) of subsection (1) if such person—

(a)

has at any time been convicted of any offence involving fraud, theft, dishonesty, breach of trust or moral turpitude;
(b)

was previously involved in the management or administration of a financial institution which was deregistered, wound up or placed under statutory management for any failure on the part of the management or the administration thereof;
(c)

is a director, officer, employee or shareholder of any insurer, broker, insurance agent or any other member of the insurance industry; or
(d)

is disqualified under any other written law from holding public office or being a director of any institution.

[Act No. 11 of 2006, s. 4.]
3C.
Powers of the Board
(1)

The Board shall have all the powers necessary for the performance of its functions under this Act and, without prejudice to the generality of the foregoing, shall have power to—

(a)

control, supervise and administer the assets of the Authority in such manner and for such purposes as best promote the purpose for which the Authority is established;
(b)

determine the provisions to be made for capital and recurrent expenditure and for the reserves of the Authority;
(c)

receive any grants, gifts, donations or endowments on behalf of the Authority and make legitimate disbursements therefrom;
(d)

enter into association with such other bodies or organisations, within or outside Kenya, as it may consider desirable or appropriate and in furtherance of the purpose for which the Authority is established;
(e)

open a banking account or banking accounts for the funds of the Authority; and
(f)

invest the funds of the Authority not currently required for its purposes in the manner provided in this Act.
(2)

The conduct and regulation of the business and affairs of the Board shall be as provided in the First Schedule, but subject thereto, the Board may regulate its own procedure.
(3)

The Board may, by resolution either generally or in any particular case, delegate to any committee of the Board or to any member, officer, employee or agent of the Authority, the exercise of any of the powers, or the performance of any of the functions or duties of the Authority under this Act, or under any other written law.

[Act No. 11 of 2006, s. 4.]
3D.
Remuneration of Board members

The Authority, in consultation with the Cabinet Secretary, shall pay the members of the Board such remuneration, fees or allowances for expenses as it may determine.

[Act No. 11 of 2006, s. 4.]
3E.
Commissioner of Insurance
(1)

There shall be a Commissioner of Insurance who shall be the Chief Executive Officer of the Authority and who shall be appointed by the Board, through an open and competitive process, on such terms and conditions of service as may be determined by the Board in the instrument of appointment.
(2)

The Commissioner shall be an ex officio member of the Board but shall have no right to vote at any meeting of the Board.
(3)

The Commissioner shall, subject to the directions of the Board, be responsible for the day-to-day management of the affairs of the Authority.
(4)

A person shall be qualified to be appointed under this section if such person—

(a)

has satisfied the requirements of Chapter Six of the Constitution;
(b)

holds at least a postgraduate degree in insurance, audit, accounting, finance, actuarial science, business studies or banking;
(c)

is a member of a professional body recognized in Kenya;
(d)

has considerable knowledge, competence and at least ten years’ experience in a managerial capacity in insurance, accounting, finance, actuarial science or banking; and
(e)

is not engaged in the insurance business as a director, employee, officer or shareholder of any insurer, broker, insurance agent, or in any other sector of the insurance industry, and if appointed shall be disqualified if he, his spouse or dependent child becomes such director, employee, officer or shareholder.
(5)

A person appointed as a Commissioner under subsection (1) shall serve for a term of three years and shall be eligible for re-appointment for a further term of three years.
(6)

Spent.

[Act No. 11 of 2006, s. 4, Act No. 1 of 2014, s. 5.]
3F.
Appointment of Secretary and other staff
(1)

The Board shall appoint a Secretary to the Board on such terms and conditions of service as it may determine.
(2)

The Board may appoint such officers or servants as are necessary for the proper discharge of the functions of the Authority under this Act or any other written law, upon such terms and conditions of service as it may determine.

[Act No. 11 of 2006, s. 4.]
3G.
Common seal of the Authority
(1)

The common seal of the Authority shall be kept in such custody as the Board may direct, and shall not be used except on the order of the Board.
(2)

The common seal of the Authority, when affixed to a document and duly authenticated, shall be judicially and officially noticed, and, unless and until the contrary is proved, any necessary order or authorisation by the Board under this section shall be presumed to have been duly given.

[Act No. 11 of 2006, s. 4.]
4.
The Insurance Regulatory Authority Fund
(1)

The Authority shall establish a general fund to be known as the Insurance Regulatory Authority Fund, hereafter referred to as "the Fund", which shall vest in the Authority.
(2)

There shall be paid into the Fund—

(a)

all proceeds of the insurance premium levy imposed by section 197A;
(b)

such moneys as may accrue to or vest in the Authority in the course of the exercise of its powers or the performance of its functions under this Act;
(c)

such sums as may be payable to the Authority pursuant to this Act or any other written law, or pursuant to any gift or trust;
(d)

such sums as may be granted to the Authority by the Cabinet Secretary pursuant to subsection (3); and
(e)

all moneys from any other source provided for, donated to or borrowed by the Authority.
(3)

There shall be made to the Authority, out of moneys provided by Parliament for that purpose, grants towards the expenditure incurred by the Board in the exercise of its powers and the performance of its functions under this Act.
(4)

The Authority may invest any of its funds in securities which trustees are by law allowed to invest trust funds, or in any other securities which the Treasury may, from time to time, approve.
(5)

There shall be paid out of the Fund all such sums of money required to defray the expenditure incurred by the Authority in the exercise of powers and performance of its functions and duties.

[Act No. 11 of 2006, s. 5.]
4A.
Financial year and annual estimates
(1)

The financial year of the Authority shall be the period of twelve months ending on the thirtieth of June in each year.
(2)

At least four months before the commencement of each financial year, the Board shall prepare estimates of revenue and expenditure of the Authority for that year.
(3)

The annual estimates shall make provision for all the estimated expenditure of the Authority for the financial year and in particular, the estimates shall provide for—

(a)

the payment of salaries, allowances and other charges in respect of the staff of the Authority;
(b)

the payment of pensions, gratuities and other charges in respect of the retirement benefits which are payable out of the funds of the Authority;
(c)

the proper maintenance of the buildings and grounds of the Authority;
(d)

the maintenance, repair and replacement of the equipment and other property of the Authority;
(e)

the creation of such reserve funds to meet future or contingent liabilities in respect of retirement benefits, insurance or replacement of buildings or equipment, or in respect of such other matter as the Board may deem appropriate.
(4)

The annual estimates shall be prepared at least three months before the commencement of the financial year to which they relate and shall be submitted to the Cabinet Secretary for approval and after such approval, the Authority shall not increase the annual estimates without the consent of the Cabinet Secretary.
(5)

No expenditure shall be incurred for the purposes of the Board except in accordance with the annual estimates approved under this section or in pursuance of an authorisation by the Cabinet Secretary.

[Act No. 11 of 2006, s. 5.]
4B.
Accounts and audit
(1)

The Authority shall cause to be kept all proper books and records of account of the income, expenditure and assets of the Authority.
(2)

Within a period of four months after the end of each financial year, the Board shall submit to the Auditor-General or an auditor appointed by the Board under the Authority of the Auditor-General, the accounts of the Authority together with—

(a)

a statement of income and expenditure during that year; and
(b)

a statement of the assets and liabilities of the Authority of the last day of that year.
(3)

The accounts of the Authority shall be audited and reported upon in accordance with the Public Audit Act (Cap. 412B).
4C.
Supersession

Where there is a conflict between the provisions of this Act and the provisions of any written law with regard to the powers or functions of the Board or the Authority under this Act, the provisions of this Act shall prevail.

[Act No. 11 of 2006, s. 5.]
5.
Particular duties of Commissioner
(1)

Subject to this Act, the duties of the Commissioner shall include—

(a)

deleted by Act No. 11 of 2006, s. 6(a)(i);
(b)

directing insurers and reinsurers on the standardisation of contracts of compulsory insurance;
(c)

directing an insurer or a reinsurer, where he is satisfied that the wording of a particular contract of insurance issued by the insurer or reinsurer is obscure or contains ambiguous terms or terms and conditions which are unfair or oppressive to the policy-holders, to clarify, simplify, amend or delete the wording, terms or conditions, as the case may be, in respect of future contracts;
(d)

the approval of tariffs and rates of insurance in respect of any class or classes of insurance;
(e)

such other duties as the Board may assign to him.
(1A)

The Board may, with the approval of the Cabinet Secretary make regulations for the purpose of giving effect to the provisions of this Part.
(2)

As soon as reasonably practicable after each year ending on 31st December, the Board shall provide the Cabinet Secretary with a report on the operation of this Act during that year, together with summaries of returns and documents deposited with the Cabinet Secretary in accordance with Part VI during that year.
(3)

Within one month after receiving the report and summaries under subsection (2), the Cabinet Secretary shall arrange for them to laid before the National Assembly.

[Act No. 12 of 1994, s. 2, Act No. 11 of 2006, s. 6, Act No. 19 of 2015, s. 32.]
5A.
Powers of the Commissioner on group-wide supervision
(1)

The Commissioner may direct any member of the group to provide any information necessary for effective groupwide supervision.
(2)

In the event of any breach or failure to comply with the directives of the Commissioner or safeguard the interests of the policyholders, the Commissioner shall impose any of the sanctions provided in the Act on the holding company or any member of the group.

[Act No. 11 of 2019, s. 3.]
6.
[Repealed by Act No. 11 of 2006, s. 7.]
7.
Power to call for information and production of books or papers
(1)

The Commissioner may, by notice in writing, require a member of the insurance industry to supply him with information relating to his insurance business, and that person shall comply with the requirement within such period after receipt of the notice as may be specified therein failing which he shall be deemed to have failed to comply with the provisions of this Act.
(2)

Information supplied under this section shall be certified by a principal officer of the member of the insurance industry in question and, if the notice so requires, also by an auditor.
(3)

The Commissioner may by notice in writing—

(a)

require a member of the insurance industry to produce, at such time and place as he may specify, such books or documents as he may specify; or
(b)

authorize any person, on producing (if required to do so) evidence of his authority, to require a member of the insurance industry to produce to him forthwith any books or documents which that person may specify.
(4)

Where by virtue of subsection (3) the Commissioner or a person authorized by him has power to require the production of books or documents from a member of the insurance industry, the Commissioner or that person shall have the same power to require production of those books or documents from any person who appears to him to be in possession of them.
(5)

Where any person form whom production of a document is required claims a lien on the document produced by him, the production shall be without prejudice to the lien.
(6)

The power conferred by or by virtue of subsections (3) and (4) to require a member of the insurance industry or other person to produce books or documents shall include power—

(a)

if the books or documents are produced—

(i) to take copies of them or extracts of or from them; and
(ii) to require that person, or any other person who is a present or past director of, auditor of, or is or was at any time employed by, the member of the insurance industry in question, to provide an explanation of any of them;
(b)

if the books or documents are not produced, to require the person who was required to produce them to state, to the best of his knowledge and belief, where they are.
(7)

A person who in purported compliance with a requirement imposed under this section furnishes information which he knows to be false in a material particular, or who recklessly furnishes information which is false in a material particular, or who, having been required to produce a book or document for examination, alters, mutilates, damages, destroys, conceals or removes it without the written consent of the Commissioner, shall be guilty of an offence and liable to a fine not exceeding two hundred thousand shillings or imprisonment for a term not exceeding twelve months or to both.

[Act No. 1 of 2014, s. 6.]
8.
Examination of reinsurance treaties
(1)

The Commissioner may—

(a)

call upon an insurer to submit for his examination at his office all reinsurance treaties and other reinsurance contracts entered into by the insurer;
(b)

by notice in writing, require an insurer to supply him with copies of any of the documents referred to in paragraph (a) certified by a principal officer of the insurer.
(2)

If on the scrutiny of a document referred to in subsection (1) or otherwise the Commissioner considers that any reinsurance treaty, contract or arrangement or any terms or conditions therein are not favourable to the insurer or are not in the interests of the economy or the insurance industry or in the public interest, he may in writing direct the insurer either—

(a)

to make, at the time when the renewal of that treaty or contract next becomes due, such modifications in its terms and conditions as he may specify; or
(b)

not to renew that treaty, contract or arrangement.
(3)

A person who fails to comply with, or contravenes any requirement imposed under, this section shall be guilty of an offence and liable to a fine not exceeding ten thousand shillings or imprisonment for a term not exceeding twelve months or to both, and if the offence is a continuing one, to a further fine not exceeding two hundred shillings for every day during which the offence continues.
9.
Directions and investigations
(1)

Where the Commissioner—

(a)

has reason to believe that—

(i) an offence under this Act or default in complying with any of the provisions of this Act or any subsidiary legislation made thereunder has been or is likely to be committed by a member of the insurance industry; or
(ii) the affairs of any member of the insurance industry are being conducted in a manner which is detrimental or prejudicial to the interests of that member, any policy-holder, the economy or the insurance industry; or
(iii) an insurer may be unable or is likely to become unable to meet his obligations or, in the case of long term insurance business, to fulfil the reasonable expectation of policy-holders or potential policy-holders; or
(b)

receives a requisition signed by not less than ten per cent of policy- holders holding policies of life assurance in force respectively for not less than three years with an insurer and which on maturity will be for a total value of not less than one million shillings, that an investigation be held into the affairs of that insurer; or
(bb)

receives a request to conduct an inquiry or investigation by a regulatory authority on a person licensed under this Act; or
(c)

receives a requisition signed by not less than one-tenth of the shareholders holding not less than one-tenth of the issued share capital of an insurer, that an investigation be held into his affairs,

the Commissioner may exercise any one or more of the powers set out in subsection (2).
(2)

The powers referred to in subsection (1) are that the Commissioner may—

(a)

by notice in writing served on the person concerned, direct him to furnish to the Commissioner within such period after service of the notice, being not less than seven days, as he specifies in the notice, information in writing about such matters in relation to the affairs of the person as he so specifies;
(b)

by notice in writing served on the person concerned direct him not to dispose of or otherwise deal with or remove from Kenya an asset in Kenya specified in the notice during such period after service of the notice, being not more than six months, as he specifies in the notice;
(c)

after giving the member of the insurance industry a reasonable opportunity of being heard, and with the written approval of the Board, give such directions in writing as he considers necessary, to be effective from a specified date;
(d)

after giving the member of the insurance industry a reasonable opportunity of being heard, and with the written approval of the Board, prohibit that member of the insurance industry from entering into any particular transaction or class of transactions;
(e)

after giving the member of the insurance industry a reasonable opportunity of showing cause why, on such grounds as he so specifies, an investigation should not be conducted in respect of that member, with the approval in writing of the Board, investigate, or, by instrument in writing appoint any person, other than a person in the employ of that member, to investigate the affairs of that member.
(3)

With regard to a requisition made under paragraph (b) or (c) of subsection (1) the Commissioner may, before ordering an investigation, require the persons making the requisition to furnish security in such amount as he considers sufficient to meet the costs to be incurred by the member of the insurance industry and by the Commissioner in respect of the investigation.
(4)

A person who fails to comply with a direction issued or who contravenes a prohibition imposed under subsection (2) shall be guilty of an offence and liable to a fine not exceeding five thousand shillings; and if the offence is a continuing one, to a further fine not exceeding one hundred shillings for every day during which the offence continues.
(5)

The Commissioner or other person appointed by him to investigate the affairs of a member of the insurance industry may, wherever necessary, employ an auditor, actuary or other person to assist him in the investigation.
(6)

All expenses of, and incidental to, an investigation under this section shall be defrayed by the member of the insurance industry and if they are not paid by him within a period of one month after the Commissioner makes a demand to him, shall constitute a civil debt recoverable summarily by the Commissioner.

[Act No. 11 of 2006, s. 8, Act No. 57 of 2012, s. 33.]
10.
Particular powers of Commissioner with regard to long term insurance business
(1)

Where an insurer carrying on long term insurance business has not issued a new policy of that category of insurance for a period of twelve months from the appointed date, or from the date of issue of the last policy, whichever is later, the Commissioner may, with the approval of the Board, direct the insurer to frame proposals for transfer or amalgamation of its business to or with another insurer.
(2)

Where an insurer fails to comply with a direction under subsection (1), or if the proposals framed by the insurer are in the opinion of the Commissioner unsatisfactory, the Commissioner may himself frame a scheme for the transfer of the business to another insurer specified by the first-mentioned insurer and approved by the Commissioner.
(3)

Where an insurer fails to implement a scheme framed by the Commissioner under subsection (2) and the Commissioner considers that the continuance in business of that insurer is likely to lead to insolvency, or is otherwise contrary to the interests of policy-holders he may with the prior approval of the Cabinet Secretary—

(a)

order an investigation of that insurer; or
(b)

apply to the court for winding up the business of the insurer in terms of section 123(1)(b).
(4)

An insurer who, upon an investigation ordered under subsection (3)(a) is found to have disposed of any assets from a closed fund contrary to the provisions of section 21A, or to have misappropriated such assets, commits an offence and is liable on conviction, to a fine not exceeding one hundred thousand shillings or, where the insurer is a natural person to imprisonment for a term not exceeding five years, or to both.
(5)

An insurer convicted under subsection (4) shall forthwith be liable to refund the assets misappropriated from the closed fund.
(6)

An insurer who fails to refund any assets under subsection (5) commits an offence and is liable on conviction to a fine not exceeding one hundred thousand shillings, or, if the insurer is a natural person, to imprisonment for a term not exceeding five years, or to both.
(7)

If an offence under subsection 6 is a continuing one, the insurer shall be liable to a further fine of five thousand shillings for every day during which the offence continues.
(8)

In this section the expression "closed fund" means a closed fund within the meaning of section 21A.

[Act No. 12 of 1987, s. 3, Act No. 12 of 1994, s. 3, Act No. 8 of 1996, s. 48, Act No. 11 of 2006, s. 9, Act No. 22 of 2022, s. 55.]
11.
Investigations of associated persons
(1)

Where an investigator believes on reasonable grounds that it is necessary for the purposes of an investigation under section 9 to investigate the whole or some part of the affairs of another person that is, or has at some relevant time been, associated with the person in respect of which he is appointed, he may, with the consent in writing of the Board, investigate the whole or that part of the affairs of that other person.
(2)

Before commencing the investigation, the investigator shall, if requested, serve on the associated person a copy of the consent in writing of the Board.
(3)

For the purposes of this section, a person is associated with another person if the two persons are related to each other and—

(a)

the first-mentioned person is a member of the insurance industry; and
(b)

either of those persons is, or has directors who are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the other person or of its directors.

[Act No. 11 of 2006, s. 10.]
12.
Powers of investigator
(1)

An investigator may, by notice in writing, require any person who is or has at any time been a director, managing director, secretary, principal officer, manager, officer, employee, agent, accountant, broker, auditor or actuary of the person being investigated to—

(a)

give to the investigator all reasonable assistance in connection with the investigation; or
(b)

appear before the investigator for examination concerning matters relevant to the investigation; or
(c)

produce any books or documents that relate to the affairs of the person being investigated.
(2)

Where books or documents are produced to an investigator under this section, the investigator may take possession of them for such period as he thinks necessary for the purposes of the investigation and may make copies of and take extracts from them, but shall permit a person who would be entitled to inspect any of them, if they were not in the possession of the investigator, to inspect at all reasonable times such of those books as that person would be so entitled to inspect.
(3)

No person shall—

(a)

refuse or fail to comply with a requirement of an investigator that is applicable to him, to the extent to which he is able to comply with it; or
(b)

in purported compliance with such a requirement, furnish information or make a statement that he knows to be false or misleading in a material particular; or
(c)

when appearing before an investigator for examination in pursuance of such a requirement, make a statement that he knows to be false or misleading in a material particular; or
(d)

obstruct or hinder an investigator in the exercise of his powers under this Act.
(4)

A person who acts in contravention of subsection (3) shall be guilty of an offence and liable to a fine not exceeding two thousand shillings.
(5)

A person being examined by an investigator shall not be excused from answering a question put to him by an investigator on the ground that the answer might tend to incriminate him but, where the person informs the investigator before answering the questions that the answer might tend to incriminate him, neither the question nor the answer shall be admissible in evidence against him in criminal proceedings other than proceedings in relation to an offence under subsection (4).
13.
Protection for persons complying

A person who complies with a requirement of an investigator under this Act shall not incur liability to any other person by reason only of that compliance.
14.
Person may be represented by an advocate

An advocate acting for a person being examined by an investigator—

(a)

may attend the examination; and
(b)

may—

(i) address the investigator; and
(ii) examine the person,

in relation to matters in respect of which the investigator has questioned the person.
15.
Notes of examination of person
(1)

An investigator may cause notes of an examination of a person to be recorded and read to or by that person and may require that person to sign the notes and, subject to section 12(5), notes signed by that person may be used in evidence in proceedings under this Act against that person.
(2)

A copy of the notes signed by a person shall be furnished without charge to that person upon request made by him in writing to the investigator.
(3)

Where notes are recorded under this section, the notes shall be furnished to the Commissioner with the report of the investigation to which they relate.
16.
Report of investigator
(1)

An investigator may make one or more reports in writing to the Commissioner during the investigation of the whole or a part of the affairs of a person and shall, if so directed in writing by the Commissioner, make such reports as are specified in the direction.
(2)

A report made on the completion of the investigation shall include—

(a)

a statement of the opinion of the investigator in relation to the grounds for investigation and the facts on which that opinion is based and recommendations thereon;
(b)

the recommendations of the investigator with respect to—

(i) the question whether the person investigated should continue to be permitted to carry on business;
(ii) any directions that should be given under section 17 to the person investigated;
(iii) the question whether the affairs of the investigated person should be reorganized; and
(iv) such other matters, affecting the person investigated or otherwise in the public interest in relation to the business carried on by the person investigated, as he thinks fit.
(3)

An investigator shall not include in a report a recommendation relating to the institution of criminal proceedings or a statement to the effect that, in his opinion, a specified person has committed a criminal offence.
(4)

The Commissioner shall give a copy of a report made to him under this section to the person investigated.
(5)

The Cabinet Secretary may, if he considers it is in the public interest to do so and after taking into consideration any advice he has received from the Attorney- General, cause the whole or some part of the report to be published.

[Act No. 19 of 2015, s. 33.]
17.
Directions to person investigated
(1)

The Commissioner may, by notice in writing, require a person investigated to comply by such date or within such period as may be specified therein, with such directions as he considers necessary in connection with any matter arising out of a report made under section 16.
(2)

Without prejudice to the generality of subsection (1), the Commissioner may, where the person investigated is an insurer, issue any one or more of the following directions—

(a)

that the insurer shall not issue new policies or undertake liability under new contracts of insurance;
(b)

that the insurer shall not renew existing policies;
(c)

that the insurer shall not issue policies in respect of a class of insurance business specified in the direction or undertake liability under contracts of insurance included in a class of contracts of insurance so specified;
(d)

that the insurer shall not renew existing policies in respect of a class of insurance business specified in the direction.
(3)

Without prejudice to the generality of subsection (1), the Commissioner may, where the person investigated is an insurer issue any one or more of the following directions—

(a)

that the insurer shall not dispose of or otherwise deal with an asset of the insurer or an asset of the insurer included in a class of assets specified in the direction;
(b)

that the insurer shall dispose of an asset of the insurer included in a class of assets specified in the direction, in such manner and within such period after the giving of the direction, not being less than twenty- one days, as the Commissioner so specifies;
(c)

that the insurer shall, within such period after the giving of the direction, not being less than twenty-one days, as the Commissioner specifies in the direction, make in his accounts such provision or further provision as the Commissioner so specifies in respect of unearned premiums or claims or in respect of both unearned premiums and claims;
(d)

that the insurer shall, within such period after the giving of the direction, not being less than twenty-one days, as the Commissioner specifies in the direction, adjust one or more of his reserves and make appropriate investment in connection with such reserve or reserves, as the case may be;
(e)

that the insurer shall make such arrangements with respect to reinsurance or retrocession as he so specifies;
(f)

that the insurer shall increase, so far as he is able to do so, his paid up capital whether by calling up such uncalled capital as is available to be called up or otherwise;
(g)

that the insurer shall not, except with the consent of the Commissioner—

(i) enter into an arrangement or agreement for the sale or disposal of his business by amalgamation or otherwise or for the carrying on of his business in partnership with another body corporate; or
(ii) effect a reconstruction of the insurer.
(h)

that the insurer shall, within such period after the giving of the directions, not being less than six months, as the Commissioner specifies in the direction, effect a reconstruction of the insurer.
(4)

If a body corporate in respect of whom a direction has been given under subsection (1), (2) or (3) is placed in liquidation, the direction ceases to have effect unless the court directs otherwise.
(5)

If the person under investigation is a body corporate and—

(a)

as a result of a report by an investigator, the Commissioner considers that it would be in the interests of policy holders for the body to be placed in liquidation; or
(b)

the body has failed, or is failing, to comply with a direction issued under this section,

the Commissioner may, after giving the body a reasonable opportunity of making representations, apply to the court for an order for the liquidation of the body, in which case the provisions of Part VI of the Insolvency Act (Cap. 53) (as modified by Part XII of this Act) apply to the body.
(6)

Where, after reading a report made under section 16, the Commissioner considers that a requisition under paragraphs (b) or (c) of subsection (1) of section 9 has been made without reasonable cause, he may order that the whole or any part of the amount furnished as security under subsection (3) of that section shall be forfeited and paid to the person investigated and the Commissioner in order to defray the respective costs incurred by them.

[Act No. 19 of 2015, s. 34, Act No. 11 of 2019, s. 4.]
18.
Secrecy
(1)

This section applies to every person who is or has been the Commissioner of Insurance or a member of the staff assisting the Commissioner or an investigator or any other person appointed by or assisting the Commissioner.
(2)

Subject to this section, a person to whom this section applies shall not, either directly or indirectly, except in the performance of a duty under or in connection with this Act, make a record of or divulge or communicate to any person, any information concerning the affairs of any other person acquired by him by reason of his office or employment under or for purposes of this Act.
(3)

Nothing in this section shall prevent the communication of information or the production of a document, by the Commissioner or by a member of the staff or other person assisting the Commissioner or by an investigator authorized by the Commissioner in that behalf, to a person to whom, in the opinion of the Cabinet Secretary, it is in the public interest that the information be communicated or the document produced.
(4)

The Commissioner or a member of the staff or other person assisting the Commissioner and authorized by him in that behalf may furnish to the Director of Statistics or to a regulatory authority information obtained from a member of the insurance industry or policy-holder:

Provided that any information furnished to the Director of Statistics or to a regulatory authority under this subsection shall be treated as confidential and used solely for the purposes of this Act.
(5)

A person who contravenes the provisions of this section shall be guilty of an offence and liable to a fine not exceeding ten thousand shillings or imprisonment for a term not exceeding twelve months or to both.

[Act No. 12 of 1994, s. 4, Act No. 57 of 2012, s. 34.]
PART III – LICENSING OF INSURERS

[Act No. 10 of 2023, Sch.]

19.
Only licensed persons to carry on insurance business
(1)

Except as otherwise provided in or under this Act, only a person licensed under this Act may carry on insurance business—

(a)

in Kenya (whether in respect of Kenya insurance or reinsurance business or otherwise); or
(b)

outside Kenya in respect of Kenya business, except Kenya business that is solely reinsurance business.
(2)

A person resident in Kenya or an association of persons or body corporate established in Kenya who or which carries on insurance business in any part of the world other than Kenya is, for the purposes of this Act, taken to be an insurer carrying on that business within Kenya.
(3)

A person who carries on insurance business in contravention of subsection (1) commits an offence and on conviction is liable to a fine not exceeding five million shillings.
(4)

If, after being convicted of an offence under subsection (3), a person continues to carry on insurance business in contravention of subsection (1), the person commits a further offence on each day on which the contravention continues and on conviction is liable to a fine not exceeding five hundred thousand shillings for each such offence.
(5)

If a person found guilty of an offence under subsection (3) is a natural person, the person is liable, in addition to, or instead of, a fine, to imprisonment for a term not exceeding two years.
(6)

If a body corporate is convicted of an offence under subsection (3), the commission of the offence constitutes grounds on which the Commissioner may apply to the court for the liquidation of the body corporate.

[Act No. 19 of 2015, s. 35, Act No. 10 of 2023, Sch.]
19A.
Takaful insurance business
(1)

A person shall not undertake takaful insurance business unless that person is licensed under this Act.
(2)

The Cabinet Secretary may, after consultation with the Authority, make Regulations providing for the licensing and supervision by the Authority of persons carrying on takaful insurance business.

[Act No. 50 of 2016, s. 3.]
20.
Placing of risks with insurers and reinsurers not licensed under this Act
(1)

No insurer, broker, agent or other person shall directly or indirectly place any Kenya business other than reinsurance business with an insurer not licensed under this Act without the prior approval, whether individually or generally, in writing of the Commissioner.
(2)

No insurer, broker, agent or other person shall directly or indirectly place any reinsurance of Kenya business with an insurer not licensed under this Act except under the following conditions—

(a)

in the case of treaty reinsurance, with the approval of the Commissioner to the treaty, and subject to such restrictions as he may specify;
(b)

in the case of facultative reinsurance subject to the prior approval in writing of the Commissioner to the placing of each particular risk with insurers or reinsurers not licensed under this Act.
(3)

Deleted by Act No. 8 of 2021, s. 56.
(4)

A person who contravenes the provisions of subsection (1) or (2) shall be guilty of an offence and liable to a fine not exceeding five million shillings or to imprisonment for a term not exceeding five years or to both.
(5)

A policy or contract of insurance or reinsurance effected or renewed in contravention of subsection (1) of section 19, or subsection (1) of this section, shall not be invalid, void or unenforceable solely on the grounds of that contravention.

[Act No. 7 of 1997, s. 14, Act No. 11 of 2017, Sch., Act No. 22 of 2017, s. 3, Act No. 8 of 2021, s. 56, Act No. 10 of 2023, Sch.]
21.
[Repealed by Act No. 19 of 2015, s. 36.]
21A.
Closed fund business
(1)

In this section, "closed fund business" means the continuance of insurance business for the purpose of maintaining, without renewal, any policy or contract of insurance issued before the appointed date.
(2)

Subject to sections 10 and 123(1)(b), an insurer may carry on closed fund business without registration under section 19.
(3)

Where the policy or contract of insurance remains unpaid or undischarged, all the provisions of this Act shall apply to that insurer unless the Cabinet Secretary, in writing, specifically exempts the insurer from any of the provisions of this Act.
(4)

The Commissioner may, by notice in writing served on the insurer carrying on closed fund business, require the insurer to furnish the Commissioner within a period not exceeding three months the particulars of the insurance business in Kenya as the Commissioner may specify in the notice.
(5)

A person who contravenes the provisions of subsections (2) and (3) commits an offence and shall, on conviction, be liable to a fine not exceeding two hundred thousand shillings and, if the offence is a continuing one, to a further fine of ten thousands shillings for each day during which the offence continues.
(6)

The penalty imposed under subsection (5) shall be paid into the Policyholders' Compensation Fund.
(7)

A person shall not dispose of any assets from a closed fund except with the prior approval of the Commissioner.

[Act No. 8 of 2021, s. 57.]
22.
Prohibition of licensing of certain persons

Subject to section 23, a person may be licensed as an insurer under this Act only if—

(a)

the person is a body corporate licensed under the Companies Act (Cap. 486); and
(b)

at least one third of the controlling interest in the body (whether in terms of shares, paid up share capital or voting rights) is wholly under the control of—

(i) citizens of a Partner State of the East African Community;
(ii) a partnership whose partners are all citizens of a Partner State of the East African Community; or
(iii) a body corporate whose shares are wholly owned by citizens of a Partner State of the East African Community or the Government, or a combination of them.

[Act No. 18 of 1986, Sch., Act No. 11 of 2006, s. 11, Act No. 1 of 2014, s. 7, Act No. 19 of 2015, s. 37, Act No. 10 of 2023, Sch.]
23.
Minimum capital requirements and holding by Kenya citizens
(1)

No person shall be licensed as an insurer unless he meets the minimum capital requirements specified in the Second Schedule.
(2)

The Authority may, by order published in the Gazette, amend the Second Schedule.
(3)

Every order made under this section shall be laid before the National Assembly without unreasonable delay and unless a resolution approving the order is passed by the Assembly within twenty days on which it next sits after the order is so laid, it shall thenceforth be void by without prejudice to anything previously done thereunder or to the issuing of a new order.
(3A)

If the Authority considers it appropriate, having regard to the nature, scale and complexity of the insurance business carried on or proposed to be carried on by an insurer, and to the insurer's risk profile, the Authority may issue—

(a)

a directive requiring the insurer to increase its paid-up capital to an amount higher than the minimum specified in the Regulations; or
(b)

a directive increasing the minimum capital adequacy requirement applicable to an insurer to a higher sum than that specified in the Regulations.
(4)

Out of the amount of the paid-out capital under subsection (1), not less than one third shall be owned by citizens of the East African Community Partner States, by a partnership whose partners are all citizens of such states, wholly owned by citizens of such states or by the Government.
(4A)

No person shall—

(a)

control, or be beneficially entitled, directly or indirectly, to more than twenty-five per cent of the paid up share capital or voting rights of an insurer; or
(b)

be entitled to appoint more than twenty-five per cent of the board of directors of an insurer; or
(c)

be entitled to receive more than twenty-five per cent of the aggregate dividends of an insurer in any given financial year:

Provided that this subsection shall not apply to—

(i) a corporate entity licensed by an insurance, banking, pensions or securities regulator in Kenya; or
(ii) a foreign corporate entity licensed by an insurance, banking, pensions or securities regulator in it's country of origin; or
(iii) the Government of Kenya;
(iv) a state corporation within the meaning of the State Corporations Act (Cap. 446);
(v) a company listed in a stock exchange.
(4B)

No person shall be appointed as an executive director, managing director, principal officer or other senior management official of an insurer if such person

(i) controls, or is beneficially entitled, directly or indirectly, to more than twenty per cent of the paid up share capital or voting rights of the insurer; or
(ii) is entitled to appoint more than twenty per cent of the Board of Directors of the insurer; or
(iii) is entitled to receive more than twenty per cent of the aggregate dividends of the insurer in any given financial year.
(4C)

A person who, at the commencement of subsections (4A) and (4B), holds any right, interest or office in an insurer contrary to the provisions of those subsections, shall comply with the requirements thereof by the 31st December, 2011.
(4D)

For the purposes of subsection (4A), indirect control or beneficial entitlement to the paid up share capital or voting rights of an insurer, means control or entitlement—

(a)

in the case of a company or body corporate, through—

(i) a holding company or its subsidiary;
(ii) a subsidiary or its holding company;
(iii) a holding company or its subsidiary;
(iv) nominees; or
(b)

in the case of an individual, through—

(i) any member of his family;
(ii) a company or other body corporate controlled directly or indirectly by him, whether alone or with his associates;
(iii) any associate of his associates, and a person shall be deemed to be a member of a family if he is the parent, spouse, brother, sister, child, uncle, aunt, nephew, niece, stepfather, stepmother, stepchild or adopted child of the person concerned, and in the case of an adopted child his adoptive parents.
(5)

A licensed insurer who permits his paid up share capital to fall below the minimum prescribed under subsection (1) commits an offence and is liable on conviction to a penalty of one hundred thousand shillings and if the offence is a continuing one, to a further fine of five thousand shillings for every day during which the offence continues.
(6)

Notwithstanding any other penalty imposed under this section, the convicted insurer shall be liable to having its license cancelled.

[Act No. 18 of 1986, Sch., Act No. 12 of 1994, s. 5, Act No. 8 of 2009, s. 46, Act No. 10 of 2010, s. 52, Act No. 1 of 2014, s. 8, Act No. 14 of 2015, s. 24, Act No. 19 of 2015, s. 38, Act No. 22 of 2017, s. 4, Act No. 10 of 2023, Sch.]
24.
[Repealed by Act No. 22 of 2017, s. 5.]
25.
Requirements as to capital structure and voting rights
(1)

No insurer being a company limited by shares shall be license to carry on insurance business unless he satisfies all the following conditions—

(a)

that the capital of the insurer may consist of—

(i) in the case of a new company, ordinary shares each of which has a single face value with voting rights and shall be irredeemable, and non-cumulative preference shares; and
(ii) in the case of existing insurers, in addition to the capital in subparagraph (1), subordinated loans as may be approved by the Authority, share premiums, reserves and any other form of capital as may be determined by the Authority from time to time.
(b)

that, except during any period not exceeding one year allowed by the company for payment of calls on shares, the paid up amount is the same for all shares, whether existing or new:

Provided that the conditions specified in this subsection shall not apply to an insurer who has, before the commencement of this Act, issued shares other than ordinary shares each of which has a single face value, or shares the paid up amount whereof is not the same for all of them, for a period of three years from that commencement.
(1A)

The capital provided under subsection (1)(a) shall not rank in priority to policyholders' interest at the time of liquidation.
(2)

Notwithstanding anything to the contrary contained in any law for the time being in force or in the memorandum or articles of association of an insurer referred to in subsection (1), but subject to the other provisions of this section, the voting rights of every shareholder of the insurer shall in all cases be strictly proportionate to the paid up amount of the shares held by him.
(3)

No insurer shall after the commencement of this Act be newly licensed for carrying on any class of insurance business if he has issued shares other than ordinary shares of the nature specified in subsection (1).
(4)

Subject to the other provisions contained in this Act, but notwithstanding anything contained in the Companies Act (Cap. 486), or in the memorandum or articles of association of an insurer referred to in subsection (1), no insurer shall, except with the prior written approval of the Commissioner, register the transfer of any shares where the transfer has the effect of reducing the proportion of share holding of citizens of Kenya in the insurer required by section 22 or 23.

[Act No. 19 of 2015, s. 40, Act No. 50 of 2016, s. 4, Act No. 10 of 2023, Sch.]
26.
Provisions relating to carrying on of both long term and general insurance business
(1)

A person licensed as an insurer under this Act shall be entitled to carry on only the class or classes of insurance business for which he has been licensed.
(2)

In the case of an insurer licensed to carry on both long term insurance business and general insurance business, the assets of the statutory funds established under section 45 in respect of long term insurance business shall be as absolutely the security of the policy-holders of the long term insurance business as though the statutory funds belonged to an insurer carrying on no other business than long term insurance business and shall not be liable for any contracts of the insurer for which the statutory funds would not have been liable had the business of the insurer been only long term insurance business and, notwithstanding the Companies Act (Cap. 486), shall not be applied directly or indirectly, either during the winding up or otherwise, for any purpose other than those of the long term insurance business of the insurer.

[Act No. 10 of 2023, Sch.]
27.
One-third of boards to be citizens of Kenya

A person being a body corporate incorporated in Kenya with or without a share capital shall not be licensed and if licensed shall have his license cancelled, if at least one third of the members of his board of directors or managing board are not citizens of Kenya.

[Act No. 12 of 1994, s. 6, Act No. 22 of 2017, s. 6, Act No. 10 of 2023, Sch.]
27A.
Qualifications of board members

A person shall not be licensed under section 31 unless—

(a)

the Board of Directors or managing board of such person comprises at least five members; and
(b)

the Commissioner is satisfied that all members of such board have knowledge and experience in matters relating to insurance, actuarial studies, accounting, finance or banking;
(c)

all the members of such Board have in writing addressed to the Commissioner signifying their acceptance to Serve on the Board.

[Act No. 9 of 2003, s. 3, Act No. 9 of 2007, s. 55, Act No. 10 of 2023, Sch.]
28.
[Repealed by Act No. 22 of 2017, s. 7.]
29.
Appropriate reinsurance arrangements
(1)

Subject to subsection (3), no person shall be registered under section 31 except a person who has re-insurance strategies and arrangements, being strategies and arrangements approved by the Commissioner, for insurance of liabilities in respect of which persons, property or interests are, or are to be, insured by the insurer in the course of carrying on insurance business.
(2)

The Commissioner shall not approve arrangements strategies or for reinsurance made or proposed to be made unless the amount of premium and commission to be paid or the manner in which the amount of premium and commission are to be ascertained are specified in the contract of reinsurance.
(3)

The Commissioner shall not approve arrangements strategies or for reinsurance where, in the opinion of the Commissioner, the retention limits are too low or too high.
(4)

The Commissioner may, in determining whether to approve strategies and arrangements for reinsurance made, or proposed to be made, by an insurer, have regard to all matters that he considers relevant and in particular to—

(a)

the class or classes of insurance business carried on or proposed to be carried on by the insurer;
(b)

the amount of premiums received by or due to the insurer during his last preceding financial year in respect of each class of insurance business carried on by him;
(c)

the amount of premiums expected by the insurer during the next financial year in respect of each class of insurance business to be carried on by the insurer;
(d)

the size of contingency loading which can be built into the premium rates of the insurer;
(e)

the amount of reinsurance commissions received by or due to the insurer during his last preceding financial year in respect of each class of insurance business carried on by the insurer;
(f)

the amount of reinsurance commissions expected to be received by the insurer during the next financial year in respect of each class of insurance business to be carried on by the insurer;
(g)

the price of reinsurance;
(h)

the nature and value of the assets of the insurer;
(i)

the capital reserves of the insurer and cost of servicing capital, investment policy and investment income;
(j)

probability, number and size of losses expected and risk characteristics of the insurer’s portfolio;
(k)

inter-dependence of exposure units; and
(l)

the person or persons by whom the reinsurance is or is proposed to be undertaken.
(5)

The Cabinet Secretary, having regard to such matters as he considers relevant, may, by notice in writing, exempt an insurer, subject to such terms and conditions and for such period as he specifies in the notice, from the requirements of subsection (1).

[Act No. 1 of 2014, s. 9, Act No. 19 of 2015, s. 42.]
30.
Application for license

An application for license as an insurer shall be in the prescribed form and shall be accompanied by—

(a)

a copy of the memorandum of association or other instrument or document by which the applicant is constituted;
(b)

a copy of the articles of association or other rules of the applicant;
(c)

a certified copy of the published prospectus, if any;
(d)

a copy of each of the proposal and policy forms, endorsements and any form of written matter describing the terms or conditions of or the benefits to or likely to be derived from policies or intended to be used by the applicant;
(e)

statements of the premium rates, advantages and terms and conditions to be offered in connection with insurance policies and details of the bases and formulae from which those rates have been calculated together with a certificate in connection with long term insurance business by an actuary that such rates, advantages, terms and conditions are sound and workable;
(f)

a detailed statement of assets and liabilities in Kenya at the date of application;
(g)

a description of all reserves made by the insurer with detailed descriptions of the method, basis and formula for calculating each of the reserves;
(h)

a certificate from the Central Bank of Kenya specifying the amounts and details of deposits under section 32 made by the applicant;
(i)

certified copies of reinsurance contracts;
(j)

the prescribed fee;
(k)

such proposals as to the manner in which it proposes to carry on business and such financial forecasts and other documents and information, if any, as may be prescribed;
(l)

an investment plan for the following period of not less than three years.

[Act No. 14 of 2015, s. 26, Act No. 10 of 2023, Sch.]
30A.
Opening of a branch
(1)

An insurer licensed under this Act wishing to open a branch or a new place of business in Kenya, or to change the location of a branch, or an existing place of business, shall apply to the Authority for approval to do so.
(2)

In considering an application under subsection (1), the Authority shall take into account—

(a)

the history and financial condition of the insurer;
(b)

the adequacy of the capital base and the structure of the insurer;
(c)

the viability and earning prospects of the branch; and
(d)

such other matter as may have a bearing on the insurer or the proposed branch.
(3)

There shall be payable, in respect of every application under subsection (1), a fee of twenty thousand shillings.
(4)

For the purposes of this section "branch" means any permanent premises, other than its head office, at which an insurer transacts business in Kenya.

[Act No. 4 of 2012, s. 33, Act No. 10 of 2023, Sch.]
31.
Licensing
(1)

Where the Board is satisfied that—

(a)

the applicant has the share capital and assets, as the case may be, required by sections 22 and 23;
(b)

the deposit required by section 32 has been made;
(c)

the applicant has adequate reinsurance arrangements or has been granted an exemption under section 29;
(d)

the applicant has adequate reserves and the methods of calculating the reserves are satisfactory;
(e)

the applicant has adequate assets in Kenya;
(f)

the volume of business which is likely to be available to, and the earning prospects of, the applicant are adequate;
(g)

the applicant is, and is likely to continue to be, able to comply with such of the provisions of this Act and regulations and directions made or issued under this Act as are applicable to the applicant;
(h)

the applicant has an adequate number of technically qualified and otherwise competent staff, including—

(i) a fit and proper principal officer who holds a technical or professional qualification in insurance, accounting or banking approved by the Commissioner, and who has more than ten years’ experience in a managerial capacity in the respective sector; and
(ii) a management staff comprising persons who hold technical or professional qualifications in insurance, accounting or banking approved by the Commissioner and who have more than five years’ experience in the respective sector, and suitable premises and facilities in Kenya to satisfactorily serve the public in respect of the class or classes of business specified in the application, the Board shall, subject to such terms and conditions as it may consider necessary, approve the registration of the applicant in respect of such class or classes of insurance as it may direct.
(2)

A licence issued under this section shall remain in force until cancelled under section 196.
(3)

An insurer issued with a license under this Act shall pay the prescribed annual fee.

[Act No. 12 of 1987, s. 4, Act No. 9 of 2003, s. 4, Act No. 11 of 2006, s. 12, Act No. 19 of 2015, s. 43, Act No. 22 of 2017, s. 8, Act No. 11 of 2019, s. 5, Act No. 8 of 2021, s. 58, Act No. 10 of 2023, Sch.]
PART IV – DEPOSITS
32.
Deposits
(1)

Subject to subsection (2), an insurer applying for license under this Act shall deposit and keep deposited with the Central Bank of Kenya (in this Part called "the Bank") in Kenya Government securities estimated at the market value of the securities on the day of deposit—

(a)

where the application is in respect of long term insurance business, a sum of five million shillings or five percentum of the total assets, whichever is higher;
(b)

where the application is in respect of general insurance business, a sum of five million shillings or five percentum of the total assets, whichever is higher;
(c)

deleted by Act No. 7 of 2002, s. 54.

(2)

Where an applicant under subsection (1) was carrying on insurance business immediately prior to the appointed date he may deposit with the Bank in Kenya Government securities a sum of one hundred and fifty thousand shillings in respect of long term business and a sum of fifty thousand shillings in respect of general business; and if the applicant is licensed he shall deposit annually thereafter further Kenya Government securities of the same amounts in respect of each of the two classes of business aforesaid, until the deposit reaches the value specified in subsection (1) for the class or classes of business for which the applicant is licensed.
(3)

If any part of a deposit made under this section is used in the discharge of any liability of the insurer, the insurer shall deposit such additional sum in securities (estimated at the market value of the securities on the day of deposit) as will make up the amount so used and, unless the deficiency is supplied within a period of two months from the date when the deposit or any part thereof is used for discharge of liabilities, the insurer shall be deemed to have failed to comply with the requirements of subsection (1).

[Act No. 8 of 1996, s. 50, Act No. 6 of 2001, s. 60, Act No. 7 of 2002, s. 54, Act No. 22 of 2017, s. 9, Act No. 10 of 2023, Sch, Act No. 10 of 2023, Sch.]
33.
Return of deposits if unlicensed
(1)

A deposit made under section 32 shall be returned by the Bank if the application for license as an insurer is not approved by the Board.
(2)

Subject to section 40(2), no deposit made in respect of a class of insurance business shall be refunded so long as the insurer carries on that business.

[Act No. 12 of 1987, s. 11, Act No. 11 of 2006, s. 13, Act No. 10 of 2023, Sch.]
34.
Deposits to be kept by Bank on behalf of insurer

Where the Board approves an application for a license under section 31, a deposit made under section 32 shall be held by the Bank on behalf of the insurer and any interest due and collected by the Bank on a deposit shall be paid to the insurer.

[Act No. 12 of 1987, s. 11, Act No. 19 of 2015, s. 44, Act No. 11 of 2019, s. 6, Act No. 10 of 2023, Sch.]
35.
Substitution of deposits

An insurer may at any time replace any securities deposited by him under this Part by other securities so long as the value of the other securities estimated at the market rates prevailing at the time of replacement is not less than the value of the securities replaced estimated at the market rates prevailing when they were deposited.
36.
Investment of amount deposited

The Bank shall, on the written application of an insurer, invest in Kenya Government securities the whole or any part of the amount received on the redemption of a deposited security.
37.
Variation of deposits
(1)

An insurer may require the Bank to sell any deposited security and to invest the net proceeds of the sale in such Kenya Government security as the insurer may direct and the new security shall be deemed to form part of the deposit under section 32.
(2)

If the amount realized by the sale of or on the maturing of the securities (excluding in the former case the interest accrued) falls short of the market value of the securities at the date on which they were deposited with the Bank, the insurer shall make good the deficiency by a further deposit in securities estimated at the market value of the securities on the day on which they are deposited, within a period of two months from the date on which the securities matured or were sold, and unless he does so the insurer shall be deemed to have failed to comply with the requirements of section 32 as to deposits.
38.
Use of deposits
(1)

A deposit made by an insurer shall be deemed to be part of the assets of the insurer, but shall not—

(a)

be capable of being transferred, assigned, or encumbered with a mortgage or other charge, by the insurer;
(b)

be available for the discharge of a liability of the insurer other than liability in respect of a policy of insurance issued in Kenya by the insurer;
(c)

be liable to attachment in execution of a judgment except a judgment obtained by a policy-holder of the insurer in respect of a debt due upon a policy of insurance issued in Kenya and which debt the policy- holder has been unable to recover in any other way.
(2)

Where a deposit is made in respect of long term insurance business, it shall not be available for the discharge of a liability of the insurer other than a liability arising out of a policy of long term insurance issued by the insurer.
39.
Return of deposits

Where the Authority is satisfied that an insurer has ceased to carry on in Kenya any class of insurance business in respect of which he has been registered and that all his liabilities in Kenya in respect of that business have been satisfied or otherwise provided for, the bank shall on the application by that insurer and on the approval of the Authority return to the insurer such part of the deposit as is not required in respect of any other class of insurance business carried on by the insurer.

[Act No. 12 of 1987, s. 11, Act No. 11 of 2019, s. 7.]
40.
Increase of deposit
(1)

Where upon examination of a return, reinsurance document or other document of or furnished by an insurer, it appears to the Commissioner that a deposit made under section 32, or the value of the assets of the insurer in Kenya, is disproportionately low in relation to the amount of insurance business carried on by that insurer in Kenya, or that it is in the opinion of the Commissioner desirable for the protection of policy-holders, the Commissioner may, after giving the insurer a reasonable opportunity of making representations, require the insurer to make an additional deposit of such sum as he shall specify not exceeding in the case of general insurance business twenty per cent, and in the case of long term insurance business ten per cent, of the premiums paid or payable in respect of policies of insurance issued in the financial year of the insurer immediately preceding the year in which the additional deposit is required to be made:
(2)

An additional deposit made in accordance with subsection (1), or any part thereof, which is in the opinion of the Commissioner no longer required shall be refunded to the insurer either on the application of the insurer or on the initiative of the Commissioner.
(3)

Subject to subsection (2), an additional deposit required to be made under subsection (1) shall be deemed to be a deposit made under section 32 and the provisions of this Part applicable to deposits shall apply to that additional deposit.

[Act No. 18 of 2023, s. 2.]
PART V – ASSETS, LIABILITIES, SOLVENCY MARGINS AND INVESTMENTS
41.
Capital adequacy
(1)

An insurer carrying on insurance business in Kenya shall at all times maintain the capital adequacy ratio of one hundred per centum.
(2)

An insurer carrying on both long term and general insurance business shall at all times maintain separate capital adequacy ratios.
(3)

The following assets shall neither be included in the capital available computation nor be used for the purposes of determining the insurer's capital adequacy under this section—

(a)

goodwill and other intangible assets that exceed five percent of total assets;
(b)

deferred tax income or expenses and deferred tax assets;
(c)

assets pledged to support credit facilities obtained by an insurer or other specific purposes;
(d)

assets over their concentration limits;
(e)

all credit facilities granted by an insurer and secured by its own shares;
(f)

prepayments;
(g)

one hundred per cent of fixed assets and computer equipment;
(h)

unsecured loans;
(i)

receivables from insurers;
(j)

merchandise inventory;
(k)

such other assets as may be prescribed.

[Act No. 12 of 1994, s. 8, Act No. 8 of 1996, s. 51, Act No. 7 of 2002, s. 55, Act No. 9 of 2007, s. 56, Act No. 8 of 2009, s. 47, Act No. 14 of 2015, s. 27, Act No. 19. of 2015, ss. 46 & 47, Act No. 50 of 2016, s. 5, Act No. 22 of 2017, s. 10.]
42.
Determination of capital required
(1)

In determining the capital required, an insurer shall—

(a)

take into consideration the capital for insurance risk, market risk, credit risk and operational risk; and
(b)

apply such capital charges on assets and liabilities as shall be determined by the Authority from time to time.
(2)

For the purpose of this section, "capital charge" means the proportion of capital required to take care of the potential deterioration of the economic value of an asset and the uncertainty in estimating liability due to the occurrence of an adverse event.

[Act No. 12 of 1994, s. 9, Act 4 of 2004, s. 76, Act No. 10 of 2010, s. 53, Act No. 50 of 2016, s. 6.]
43.
[Repealed by Act No. 50 of 2016, s. 7.]
43A.
[Repealed by Act No. 28 of 2019, s. 3.]
44.
Assessment of assets and liabilities
(1)

The Commissioner may, by notice in writing served on an insurer, require the insurer to furnish him with such information with respect to any liability of the insurer or value of an asset of the insurer as he specifies in the notice.
(2)

Where the Commissioner is not satisfied that the value of a liability or asset of the insurer as determined by the insurer has been correctly determined, he may, after giving the insurer an opportunity of making representations, by notice in writing served on the insurer, require the insurer to produce a valuation of the liability or asset worked out by an independent valuer approved by the Commissioner.
45.
Establishment of statutory fund
(1)

An insurer carrying on long term insurance business in Kenya on the appointed date shall, as at the date of commencement of his financial year next after the appointed date, and every insurer commencing long term insurance business in Kenya after the appointed date shall, as at the date of commencement of that business, establish and maintain a statutory fund under an appropriate name in respect of the long term insurance business carried on by him.
(2)

An insurer may establish and maintain a separate statutory fund, under an appropriate name, in respect of any class or classes of his long term insurance business.
(3)

Where an insurer carries on long term insurance business of more than one class, the Commissioner may in writing direct the insurer—

(a)

to establish, maintain and appropriately name one or more separate statutory funds in respect of any class or classes of long term insurance business carried on by him;
(b)

to maintain an account in respect of each of those classes of long term insurance business and to carry and enter the receipts of each of those classes of business in the account maintained by him.
(4)

All amounts received by an insurer in respect of any class of long term insurance business, after the establishment by the insurer of a statutory fund under this section, shall be carried to that fund.
(5)

Where, at any time—

(a)

an insurer is maintaining more than one statutory fund in respect of his long term insurance business; and
(b)

a particular policy ceases to be included in the class of the long term insurance business of the insurer in respect of which one of the statutory funds is maintained (in this subsection referred to as "the first fund") and commences to be included in the class of the long term insurance business of the insurer in respect of which another of the statutory funds is maintained (in this subsection referred to as "the second fund"),

the insurer shall forthwith transfer from the first fund to the second fund assets equal to the liability on the policy at that time as ascertained by an actuary and approved by the Commissioner.
(6)

The income arising from the investment of the assets of a statutory fund shall be carried to and form part of that fund.
(7)

The assets of each statutory fund shall be kept distinct and separate from all other assets of the insurer.
(8)

An insurer carrying on long term insurance business shall maintain such books of account and other records as are necessary for identifying—

(a)

the assets representing each statutory fund maintained by the insurer under this section;
(b)

the liabilities attributable to that class or, as the case may be, each of those classes of long term insurance business.

[Act No. 12 of 1994, s. 10.]
46.
Application of statutory fund
(1)

Subject to this Act, no part of the assets of a statutory fund shall, so long as the insurer carries on the class or classes of long term insurance business in respect of which the fund was established—

(a)

be available to meet any liabilities or expenses of the insurer other than—

(i) liabilities or expenses referable to that class of long term insurance business; and
(ii) liabilities charged on those assets or any of them immediately prior to the appointed date, or be otherwise directly or indirectly applied for any purpose other than the purpose of that class of long term insurance business;
(b)

be—

(i) paid, applied or allocated as dividends or otherwise as profits to shareholders; or
(ii) transferred to another statutory fund.
(2)

A mortgage or charge (including a charge imposed by a court on the application of a judgment creditor) shall be void to the extent to which it contravenes subsection (1).
(3)

A person who contravenes subsection (1) shall be guilty of an offence and liable to a penalty not exceeding twenty thousand shillings and, if he is a natural person, additionally or in the alternative to imprisonment for a term not exceeding two years.
(4)

Every director and principal officer of an insurer shall be under the same liability, in the event of a contravention of subsection (1), as if he had been a trustee under a trust for the execution of those provisions in respect of that fund, and as if the appropriate policy-holders had been beneficiaries of such a trust, unless the director or principal officer proves that the contravention occurred without his knowledge and that he used all due diligence to prevent the contravention.
(5)

Notwithstanding subsection (1), an insurer may, for the purposes of declaring or paying a dividend to shareholders or a bonus to policy-holders, utilize the surplus disclosed in the valuation balance sheet of a statutory fund set out in the actuary’s abstract relating to an investigation made in pursuance of section 57 and accepted by the Commissioner, subject to the condition that the amount allocated or paid to the shareholders out of a statutory fund shall not exceed thirty per cent of the surplus disclosed therein after making the necessary adjustments to the surplus.
(6)

The adjustments referred to in subsection (5) are—

(a)

the actual amount of income tax deducted at source during the period following the date on which the last preceding investigation was made and preceding the date on which the investigation in question is made may be added to the surplus after deducting an estimated amount of income tax on the surplus, the addition and deduction being shown in the abstract prepared by the actuary;
(b)

the surplus may be increased by contributions out of a reserve fund subject to the condition and only to the extent that the reserve fund has been made up solely of transfers from similar surpluses disclosed by investigations in respect of which the returns have been accepted by the Commissioner.
(7)

Notwithstanding anything to the contrary contained in this section, an insurer carrying on long term insurance business may declare an interim bonus or bonuses to policy-holders whose policies mature for payment by reason of death or otherwise during the inter-investigation period on the recommendation of the investigating actuary made at the last preceding investigation.

[Act No. 8 of 1991, s. 81, Act No. 9 of 1992, s. 59, Act No. 12 of 1994, s. 11, Act No. 8 of 1996, s. 52, Act No. 4 of 1999, s. 12.]
47.
Assets to be in the name of insurer
(1)

Unless the Cabinet Secretary directs otherwise, none of the assets in Kenya of an insurer shall, except in the case of assets required by law or by a requirement imposed by the Cabinet Secretary under subsection (3) to be vested in trustees, be kept otherwise than in the name of the insurer.
(2)

Nothing contained in subsection (1) shall be deemed to prohibit the endorsement in favour of a bank of any security or other document solely for the purpose of collection or realisation of any interest, bonus or dividend.
(3)

The Cabinet Secretary may direct that the whole or a specified portion of the assets of an insurer shall be held by a person approved by him as trustee of the insurer.
(4)

Assets of an insurer held by a person as trustee for an insurer shall be held by him in compliance with a direction given under this section if, and only if, they are assets in whose case the insurer has given him written notice that they are to be held by him in compliance with such a requirement, or they are assets into which the first-mentioned assets have been transposed by him on the instructions of the insurer.
(5)

No assets held by a person as trustee for an insurer in compliance with a direction given under this section shall, so long as the direction is in force, be released except with the consent of the Cabinet Secretary.
(6)

If a mortgage or charge is created by an insurer at a time when there is in force a direction imposed on the insurer by virtue of this section, being a mortgage or charge conferring a security on any assets which are held by a person as trustee for the insurer in compliance with the direction, the mortgage or charge shall, to the extent that it confers such a security, be void against the liquidator and any creditor of the insurer.

[Act No. 14 of 2015, s. 28, Act No. 19 of 2015, s. 48.]
48.
Investments of the Assets of Insurer

Subject to the provision of section 41 and 50 and to any provisions in the instruments constituting the insurer or in the articles of association or other rules of the insurer which impose restrictions upon the manner in which the assets of the insurer may be invested, the assets of an insurer shall, with sufficient regard to considerations of security, liquidity and income, be invested in accordance with the provisions of such investment guidelines as may be issued by the Authority.

[Act No. 14 of 2015, s. 29, Act No. 19 of 2015, s. 49.]
49.
Unsuitable investments

If at any time the Commissioner considers an investment constituting an insurer’s assets to be unsuitable or undesirable, he may after giving notice to the insurer stating the grounds on which he proposes to exercise his power under this section and giving the insurer an opportunity of being heard, direct the insurer to realize the investment, and the insurer shall comply with the direction within such time as may be specified in that behalf by the Commissioner.
50.
Insurer to submit investment policy
(1)

Every insurer shall invest its assets in accordance with the investment guidelines issued under section 48.
(2)

Every insurer shall submit to the Authority an investment policy in such manner, form and for period not less than three years or such longer period as the Authority may determine from time to time.

[Act No. 18 of 1986, Sch., Act No. 12 of 1994, s. 13, Act No. 5 of 1998, s. 52, Act No. 8 of 2008, s. 61, Act No. 14 of 2015, s. 30, Act No. 19 of 2015, s. 50.]
51.
Restriction on mortgages, etc. of assets
(1)

An insurer may, to secure temporary loans or bank overdrafts, mortgage or charge assets not exceeding ten per cent of the total value of the total assets of the insurer.
(2)

Subject to subsection (1), an insurer shall not mortgage or charge any of his assets.

[Act No. 22 of 2017, s. 12.]
PART VI – ACCOUNTS, BALANCE SHEETS, AUDIT AND ACTUARIAL INVESTIGATIONS
52.
Separate accounts for each class

Where an insurer carries on more than one class of long term insurance business or more than one class of general insurance business, he shall keep separate accounts of receipts and payments in respect of each prescribed class of insurance business carried on by him.
53.
Apportionment between classes

Where a single amount received or paid, whether in respect of premiums, investment income, claims, commissions, reinsurance costs, administration costs, taxes or otherwise, is received or paid in respect of more than one class of business prescribed under section 52, and the amount is not otherwise allocatable between the different classes, the insurer shall, for the purposes of this part, apportion the amount in an equitable manner between the classes of insurance business in respect of which it is received or paid.
54.
Accounts and balance sheets
(1)

Subject to subsection (3), every insurer incorporated in Kenya shall, in respect of all insurance business wherever carried on by the insurer; after the end of each financial year, prepare for the year, in accordance with the prescribed forms, a revenue account for the year, a balance sheet as at the end of the year and a profit and loss account for the year, or, in the case of a company not trading for profit, an income and expenditure account of the year:

Provided that an insurer shall, in respect of every quarter, prepare and submit to the Commissioner, within thirty days of the end of the quarter to which it relates, an unaudited revenue account, balance sheet, profit and loss account and statement of assets and liability.
(1A)

The revenue account, balance sheet, profit and loss account and financial statement required to be prepared under subsection (1) shall be prepared in accordance with International Financial Reporting Standards and such accepted Kenyan reporting standards as may be prescribed.
(2)

Every reserve shall be calculated in accordance with the method approved for the purpose by the Commissioner.
(3)

All amounts which are required to be shown in any account or balance sheet shall be shown in Kenya currency to the nearest shilling.
(4)

Notwithstanding the definition of "financial year" in section 2, the first financial year after the appointed date of an insurer shall mean the period ending on 31st December next after the appointed date.
(5)

In subsection (1A), "International Financial Reporting Standards" means—

(a)

the standards issued by the International Accounting Standards Board of London; or
(b)

Kenyan accepted standards developed by the Institute of Certified Public Accountants of Kenya.
(6)

An insurer that fails to comply with subsection (1) shall be liable to a penalty of two hundred thousand shillings and a further penalty of ten thousand shillings for each day after the expiry or. the prescribed period during which the insurer remains non-compliant.
(7)

The penalty imposed under subsection (6) shall be payable into the Policyholders' Compensation Fund.

[Act No. 9 of 2003, s. 5, Act No. 9 of 2007, s. 57, Act No. 57 of 2012, s. 35, Act No. 1 of 2014, s. 10, Act No. 22 of 2017, s. 13, Act No. 28 of 2019, s. 4. (a),(b).]
54A.
Group Accounts

Where an insurer is a member of a group of companies, the group of companies shall submit audited group accounts.

[Act No. 22 of 2017, s. 14.]
55.
Accounting records
(1)

An insurer shall—

(a)

keep such accounting records as correctly record and explain the transactions and financial position of the insurer with respect to his insurance business;
(b)

so keep his accounting records as to enable the accounts, reports and statements required under this Part to be prepared;
(c)

so keep his accounting records as to enable those accounts and statements to be conveniently and properly audited in accordance with this Act.
(2)

An insurer shall retain his accounting records kept in accordance with subsection (1) for at least seven years after the completion of the transactions to which they relate.
(3)

Deleted by Act No. 9 of 2003, s. 6.

[Act No. 9 of 2003, s. 6.]
56.
Audit and auditor’s certificate
(1)

The accounts of every insurer shall be audited annually by an auditor.
(2)

The auditor shall in a certificate relating to accounts and statements in respect of a financial year of an insurer, state whether—

(a)

the accounts and statements to which it relates appear to him to be in accordance with the Act and give particulars of any matters that do not appear to him to be so in accordance;
(b)

the accounting records of the insurer in respect of that year appear to him to have been properly kept and to record and explain correctly the transactions and financial position of the insurer and give particulars of accounting records that appear to him not to have been so kept and of transactions that appear to him not to have been so recorded;
(c)

in respect of that year, he has obtained the information and explanations that he requested and give particulars of information and explanations he requested but did not obtain;
(d)

he is satisfied that the accounts and statements referred to in paragraph (a) agree with the accounting records of the insurer and appear to him truly to represent the transactions and financial position of the insurer in respect of the financial year to which they relate and, if any of them appear to him to fail so to represent the transactions and financial position, give particulars of the failure;
(e)

amounts required by section 53 to be apportioned have been equitably apportioned and if they have not been so apportioned give particulars of the failure;
(f)

all management expenses wherever incurred in respect of the insurer’s business, whether directly or indirectly, have been fully debited in the revenue account or profit and loss account as expenses and, if they have not been so debited, give particulars of the amounts not so debited;
(g)

every reserve has been calculated in accordance with the method approved for the reserve by the Commissioner and, if they have not been so calculated, give particulars of the reserves not so calculated.
(3)

The auditor shall in addition issue in relation to the accounts the certificate required under the Companies Act (Cap. 486).
(4)

Every insurer shall, for the purposes of this section, appoint annually an auditor who is approved by the Commissioner.
(5)

If an insurer fails to appoint an approved auditor under subsection (4), or to fill any vacancy for an auditor which may arise, the Commissioner may appoint an auditor and fix the remuneration to be paid by the insurer to him.
(6)

The Commissioner may require an auditor to undertake the following duties in addition to those prescribed under subsections (2) and (3)—

(a)

to submit such additional information in relation to his audit as the Commissioner may consider necessary;
(b)

to carry out any other special audit or investigations; and
(c)

to submit a report on any of the matters referred to in paragraphs (a) and (b);

and the insurer concerned shall remunerate the auditor in respect of the discharge by him of all or any of such additional duties.
(7)

If the auditor of an insurer fails to comply with the requirements of this Act, the Commissioner may remove him from office and appoint another person in his place—
(8)

A person shall not be qualified for appointment as an auditor of an insurer if he is—

(a)

a director, officer or employee of that insurer; or
(b)

a person who is a partner of a director, officer or employee of that insurer; or
(c)

a person who is an employee or employee of a director, officer or employee of that insurer; or
(d)

a person who is a director, officer or employee, of a person related to that insurer; or
(e)

a person who, by himself, or his partner or his employee, regularly performs the duties of secretary or accountant for that insurer; or
(f)

a firm or member of a firm of auditors of which any partner or employee falls within the above categories.
(9)

No duty to which an auditor of an insurer may be subject shall be—

(a)

regarded as contravened by reason of his communicating in good faith to the Commissioner, whether or not in response to a request made by him, any information or opinion on a matter to which this Act applies.
(b)

This subsection applies to any matter of which an auditor becomes aware in his capacity as an auditor or in the discharge of his duties under this Part and which relates to the business or affairs of the insurer.

[Act No. 12 of 1994, s. 14, Act No. 19 of 2015, s. 51.]
57.
Actuarial investigation
(1)

An insurer—

(a)

shall on the 31st December in every year and irrespective of any contrary provision in the articles of association or deed of settlement, cause an investigation to be made into his financial condition in accordance with section 58; and
(b)

when such an investigation has been made, or when at any other time an investigation into the financial condition of the insurer is made with a view to the distribution of profits, or the results of which are made public, shall cause an abstract of the actuary’s report of the investigation to be made in such form and containing such matters as may be prescribed by the Authority.
(2)

An investigation to which subsection (1) relates shall include—

(a)

a valuation of the liabilities of the insurer attributable insurance business;
(b)

in respect to long-term insurance business or any other funded insurance business, a determination of any excess over those liabilities of the assets representing the fund or funds maintained by the insurer in respect of that business; and where any rights of any long term policyholders to participate in profits relate to particular parts of such a fund, a determination of any excess of assets over liabilities in respect of each of those parts; and
(c)

a financial condition report in the form prescribed by the Authority providing an assessment of material risks and issues impacting on the financial condition of the insurer.
(3)

Whenever an investigation to which subsection (1) relates is made, the insurer shall prepare a statement, in such form and containing such matters as may be prescribed by the Authority.
(4)

When an investigation to which subsection (1) relates is made as at a date other than the expiry of a financial year of the insurer, the accounts for the period since the expiry of the last year of account and the balance sheet on the date as at which the investigation is made shall be prepared and audited in the manner provided under sections 54 and 56.
(5)

Subject to section 58, for the purposes of an investigation to which this section relates, the value of any assets and the amount of any liabilities shall be as prescribed by the Authority.

[Act No. 18 of 1986, Sch., Act No. 12 of 1994, s. 15, Act No. 50 of 2016, s. 8.]
58.
Actuarial valuations
(1)

The provisions of this section apply in relation to valuation made, in respect of an insurer carrying on insurance business, in pursuance of section 57.
(2)

The basis of valuation of technical reserves adopted shall be as prescribed by the Authority.
(3)

The value placed upon the aggregate liabilities in respect of policies by reason of the adoption of any basis of valuation shall not be less than it would have been if it had been calculated on the prescribed basis.
(4)

The actuary who makes the valuation shall certify whether in his opinion the value placed upon the aggregate liabilities in respect of policies by the valuation is not less than the value which would have been placed upon those aggregate liabilities if it had been calculated on the prescribed basis.
(5)

In making a determination in terms of section 57(2)(b), the actuary shall—

(a)

take necessary steps to ensure that any sum representing expenses of organisation or extension, or the purchase of business or goodwill or other intangible assets, are equitably allocated between the different statutory funds and are appropriately deducted from the surplus disclosed in each fund or appropriately added to the deficiency disclosed in each fund, as the case may be;
(b)

satisfy himself that the value of the assets adopted by him are, on the basis of the auditor’s certificates appended to the balance sheet, fully of the value so adopted; and
(c)

certify in regard to the matters specified in subsections (2) and (3) and paragraphs (a) and (b) of this subsection in the prescribed form.
(6)

If the Commissioner considers that an investigation under section 57 does not properly indicate the state of affairs of the insurer due to a faulty basis having been adopted in the valuation, the Commissioner may, after giving the insurer a reasonable opportunity of making representations, cause a further investigation in accordance with section 57 and this section as at a date which he may specify to be made at the expense of the insurer by an actuary appointed by the Commissioner or, if the Commissioner so agrees, by an actuary appointed by the insurer and approved by the Commissioner.
(7)

The insurer shall make available to the actuary all documents and information required by him for the purpose of the further investigation or valuation under subsection (6) within such period, not being less than three months, as the Commissioner may specify.
(8)

An actuary making an investigation or valuation under subsection (6) shall prepare and attach to his report an abstract and a statement of the business of the insurer as for an investigation under section 57.

[Act No. 5 of 1998, s. 53, Act No. 50 of 2016, s. 9.]
59.
Returns

An insurer shall prepare as at the end of each financial year, in respect of that year, statements and certificates in the prescribed form relating to the business carried on during the year and the business in force at the end of the year and shall furnish those statements and certificates, signed in the prescribed manner, to the Commissioner within such time as may be prescribed.

[Act No. 5 of 1998, s. 54.]
60.
Accounts and statements to be signed
(1)

The audited balance sheet, profit and loss account and revenue account required to be prepared under this Part shall be signed by two directors and the principal officer of the insurer or, if there is only one director, by that director and by the principal officer.
(2)

A report or abstract of an actuary made under this Part shall be signed by the actuary who made the investigation or valuation.
(3)

A statement or return other than a balance sheet, profit and loss account, revenue account or actuarial report or abstract shall be signed by the principal officer.

[Act No. 12 of 1994, s. 16.]
61.
Submission of accounts and statements
(1)

Every account, balance sheet, certificate, abstract, return or statement required to be prepared or prepared under sections 54, 56, 57, 58 and 59 shall be deposited with the Commissioner within three months after the end of the period to which they relate:

Provided that the insurer shall cause a copy of the audited balance sheet deposited with the Commissioner to be published in at least two daily newspapers of national circulation, within thirty days of such deposit.
(2)

The Commissioner may on the application of an insurer extend or further extend the time specified in subsection (1) for a period not exceeding three months.
(3)

Where on receipt of any of the documents submitted under subsection (1), any account, balance sheet, certificate, abstract, return or statement is found to be incomplete or erroneous or misleading, the Commissioner may reject it and the insurance shall be deemed not to have complied with the requirements of subsection (1) or (2), as the case may be, unless the document is resubmitted within the period specified under those subsections.
(4)

Where an insurer fails to submit any document under subsection (1) within the period prescribed in that subsection or in subsection (2), the insurer may make a late submission of the document upon payment of a penalty of two hundred thousand shillings and a further penalty of ten thousand shillings for every day after the expiry of the prescribed period during which the document remains unsubmitted.
(4A)

The annual accounts and statement of an insurer shall be in such form as the Authority may, from time to time, require and subject to such conditions as the Commissioner may prescribe, may be submitted through the use of information technology.
(5)

The penalty under subsection (4) shall be paid to the Policy-holders Compensation Fund in such manner as may, from time to time, be prescribed by the Authority.

[Act No. 12 of 1994, s. 17, Act No. 9 of 2003, s. 7, Act No. 9 of 2007, s. 58, Act No. 10 of 2010, s. 54, Act No. 57 of 2012, s. 36, Act No. 1 of 2014, s. 11.]
62.
Further information
(1)

An insurer shall, if so required by the Commissioner by notice in writing served on him, furnish, within such period after service of the notice, not being less than ten days, as the Commissioner specifies in the notice, information with respect to such matters relating to an account, balance sheet, certificate, abstract, return or statement deposited by him under this section as he so specifies.
(2)

Where a person fails to comply with the requirements of subsection (1), the Commissioner may decline to accept the document in respect of which the further information was sought, whereupon the document shall be deemed not to have been deposited in terms of this Act.

[Act No. 12 of 1994, s. 18.]
63.
Other reports
(1)

An insurer shall deposit with the Commissioner a certified copy of every report on the affairs of the concern which is submitted to the members or policy- holders of the insurer immediately after its submission to the members or policy-holders, as the case may be.
(2)

An insurer, being a body corporate incorporated in Kenya, shall deposit with the Commissioner a certified copy of the minutes of the proceedings of every general meeting, as entered in the minute book of the body corporate, within thirty days from the holding of the meeting to which those minutes relate.
64.
Returns sufficient compliance with Companies Act (Cap. 486)

Where an insurer in any year deposits his accounts and balance sheet in accordance with the provisions of section 61 then, if the company at the same time sends a copy of the accounts and balance sheet to the Registrar of companies under the Companies Act (Cap. 486)—

(a)

section 128(1) of that Act (which requires certain documents to be included in the annual return made by a company) shall not apply to that company; and
(b)

the copy of the accounts and balance sheets so sent shall be dealt with in all respects as if it had been sent in compliance with that subsection.
65.
Rectification of returns
(1)

The Commissioner may, if it appears to him that any account, balance sheet, abstract, certificate, statement, return, report or other document deposited with him under the provisions of this Act is inaccurate or defective in any respect, require the inaccuracy or defect to be rectified within such time, not being less than ten days as he may specify in writing.
(2)

Where a person fails to comply with a direction given under subsection (1), the Commissioner may decline to accept the document required to be rectified, whereupon the document shall be deemed to have not been deposited in terms of this Act.

[Act No. 12 of 1994, s. 19.]
66.
Penalty for false statements

If any account, balance sheet, abstract, return, certificate, statement or other document required to be deposited or deposited under any provision of this Act is false in any material particular to the knowledge of any person who signs it, that person shall be guilty of an offence and liable to a fine not exceeding ten thousand shillings or to imprisonment for a term not exceeding twelve months or to both.
67.
Penalty for failure to comply with requirements of Part
(1)

An insurer who fails to comply with any requirement under this Part shall be guilty of an offence and liable to a fine not exceeding one hundred thousand shillings; and if the offence is a continuing one, to a further fine of five thousand shillings for every day during which the offence continues.
(2)

Where a person guilty of an offence under this Part is a natural person, that person shall be liable, in addition to, or in the alternative to, a fine, to imprisonment for a term not exceeding two years.
(3)

Where a person guilty of an offence under this Part is a body corporate, then notwithstanding the imposition of any penalty, the commission of that offence shall constitute grounds whereby the Commissioner may apply to the court for the winding up of that body corporate.

[Act No. 12 of 1994, s. 20, Act No. 8 of 1996, s. 53.]
PART VIA – INSPECTION AND CONTROL OF INSURERS
67A.
Inspection of Insurers
(1)

The Commissioner may, at any time and from time to time, and shall, if so directed by the Cabinet Secretary, cause an inspection to be made by any person authorized by him in writing, of any insurer and any other person licensed under this Act, and of his books, accounts and records.
(2)

When an inspection is made under subsection (1), the insurer and any other person licensed under this Act, concerned and every officer and employee thereof shall produce and make available to the person making the inspection all the books, accounts, records and other documents of the insurer and any other person licensed under this Act, and such correspondence, statements and information relating to the insurer, and any other person licensed under this Act, its business and the conduct as thereof as the person as making the inspection may require and within seven days or such longer times as he may direct in writing.
(3)

Any failure to produce any books, accounts, records, documents, correspondence, statements, returns or other information within the period specified in the direction under subsection (2) constitutes a contravention of the provisions of this Act:

Provided that—

(a)

the books, accounts and other documents required to be produced shall not, in the course of inspection, be removed from the premises of the insurer or reinsurer or other premises at which they are produced;
(b)

the person making the inspection may make copies of any books, accounts and other documents required for the purposes of his report; and
(c)

all information obtained in the course of the inspection shall be treated as confidential and used solely for the purposes of this Act.
(4)

The person making the inspection shall submit his report to the Commissioner; and the report shall draw attention to any breach or non- observance of the requirements of this Act and any regulations made thereunder, any irregularity in the manner of conduct of the business of the insurer and any other person licensed under this Act or any apparent mismanaging or lack of management skills in that insurer and any other person licensed under this Act, and any other matter revealed or discovered in the course of the inspection warranting, in the opinion of the person making the inspection, remedial action or further investigation.

[Act No. 12 of 1994, s. 21, Act No. 9 of 2003, s. 8, Act No. 10 of 2023, Sch.]
67B.
Directions to person inspected

The Commissioner may, by notice in writing, and after giving the insurer and any other person licensed under this Act, a reasonable opportunity of being heard, require the inspected person to comply by such date or within such period as maybe specified therein, with such directions as he considers necessary in connection with any matter arising out of a report made under section 67A.

[Act No. 12 of 1994, s. 21, Act No. 9 of 2003, s. 9, Act No. 10 of 2023, Sch.]
67C.
Power of the Commissioner to intervene in management
(1)

This section applies and the powers conferred by subsection (2), may be exercised in the following circumstances—

(a)

if the insurer is found to have failed to meet the capital adequacy ratios required under section 41 of the Act;
(b)

if the insurer has failed to submit any of the accounts, returns, statements, actuarial valuations or other reports under Part VI for over six months after the end of the financial year to which they relate;
(c)

if the insurer having failed to comply with any requirement of this Act, has continued that failure, or having contravened any provision of this Act, has continued that contravention for a period of six months after notice of such failure or contravention has been given to him by the Commissioner;
(d)

where, having regard to the financial circumstances of the person licensed, the Commissioner is satisfied that the person cannot carry on the business, or any part of the business, for which he is licensed, as the case may be, in a satisfactory and efficient manner;
(e)

if an amount due by the insurer under a judgement entered into in an action in Kenya arising out of a policy of insurance issued by the insurer or a contract of reinsurance entered into by a reinsurer, has remained unpaid for three months after the date of the final adjudication in that action;
(f)

if the business of the insurer is wholly or is unproportionately reinsured with another person;
(g)

if an insurer is unable to pay its debts within the meaning of section 384 of the Insolvency Act (Cap. 53);
(h)

if the insurer is found to have made adequate reserves or to have understated the level of his liabilities;
(i)

if the insurer is discovered to have submitted or provided any accounts, returns, statements, books, records, correspondence, documents or other information relating to his business which is false or misleading; or
(j)

if the Commissioner discovers, whether on an inspection or otherwise, or becomes aware of any fact or circumstance which, in his opinion, warrants the exercise of the relevant power in the interests of the insurer, its shareholders, policy-holders, or reinsurer or in the public interest.
(2)

The Commissioner may, with the approval of the Board—

(i) appoint a competent person familiar with the business of the insurer (in this Act referred to as a "manager") to assume the management, control and conduct of the affairs and business of an insurer to exercise all the powers of the insurer to the exclusion of its Board of Directors, including the use of its corporate seal;
(ii) remove any officer or employee of an insurer who, in the opinion of the Commissioner, has caused or contributed to any contravention of any provisions of this Act, or any regulations or directions made thereunder or to any deterioration in the financial stability of the insurer or has been guilty of conduct detrimental to the interests of policy- holders or other creditors of the insurer;
(iii) appoint three competent persons familiar with the business of insurers to its Board of Directors to hold office as directors who shall not be removed from office without the approval of the Commissioner;
(iv) by notice in the Gazette, revoke or cancel any existing power of attorney, mandate, appointment or other authority by the insurer in favour of any officer, employee or any other person.
(3)

The appointment of a manager shall be for such period, not exceeding twelve months, as the Commissioner shall specify in his instrument of appointment and may be extended by the High Court, upon the application of the Commissioner if such extension appears to the High Court to be justified.
(4)

A manager shall, upon assuming the management control and conduct of the affairs and business of an insurer, discharge his duties with diligence and in accordance with sound insurance, actuarial and financial principles and, in particular, with due regard to the interests of the insurer, its policy-holders and the insuring public in general.
(5)

The responsibilities of a manager shall include—

(a)

tracing, preserving and securing all the assets and property of the insurer;
(b)

recovering all debts and other sums of money due to and owing to the insurer;
(c)

evaluating the solvency and liquidity of the insurer;
(d)

assessing the insurer’s compliance with the provisions of this Act and regulations made or directions issued thereunder;
(e)

determining the adequacy of the capital and reserves and the management of the insurer and recommending to the Commissioner any restructuring or reorganisation which he considers necessary and which, subject to the provisions of any other written law, may be implemented by him on behalf of the insurer; and
(f)

obtaining from any former principal officer, director, secretary, officer or employee of the insurer any documents, records, accounts, statements, correspondence or information relating to its business.
(5A)

For the purpose of this section, preserving the assets of the insurer shall include realization of the assets of the insurer upon the approval of the Authority.
(6)

The Manager shall, within a period of twelve months from the date of his appointment, prepare and submit to the Commissioner a report on the financial position and the management of the insurer with recommendations as to whether—

(i) the insurer is capable of being revived; or
(ii) the insurer should be liquidated.
(7)

The Commissioner shall, after taking into account the report of the manager, make appropriate recommendations to the Board, who shall then take a decision on the matter.
(8)

Where the Board decides that the insurer should be liquidated, the provisions of section 123 shall apply.
(9)

Neither the Commissioner or any other officer or employee of the Commissioner, nor the manager nor any other person appointed, designated or approved by the Commissioner under the provisions of this Part shall be liable in respect of any act or omission done in good faith in the execution of the duties undertaken by him.
(10)

For the purposes of discharging his responsibilities, a manager shall have power to declare a moratorium on the payment by the insurer of its policy-holders and other creditors and the declaration of a moratorium shall—

(a)

be applied equally to all classes of policy-holders and creditors, subject to such exemptions in respect of any class of insurance as the manager may, by notice in the Gazette specify;
(b)

suspend the running of time for the purposes of any law of limitation in respect of any claim by any policy-holder or creditor of the insurer;
(c)

cease to apply upon the termination of the manager’s appointment whereupon the rights and obligations of the insurer, its policy-holders and creditors shall, save to the extent provided in paragraph (b), be the same as if there had been no declaration under the provisions of this subsection:

Provided that this subsection does not apply to any sum due as contributions or penalties to the Policyholders' Compensation Fund.
(11)

For the purpose of this section, where a moratorium is declared under subsection (10), a policyholder shall not be liable to pay any claim not payable by the insurer due to the moratorium.

[Act No. 12 of 1994, s. 21, Act No. 8 of 1996, s. 54, Act No. 11 of 2006, s. 14, Act No. 1 of 2014, s. 12, Act No. 19 of 2015, s. 52, Act No. 28 of 2019, s. 5(a)(b)(c), Act No. 10 of 2023, Sch.]
67D.
Part to apply to unlicensed persons
(1)

Without prejudice to the provisions contained under section 19, the provisions of this Part shall apply to any person who, in the opinion of the Commissioner, is, or is deemed or suspected to be carrying on or transacting insurance or reinsurance business without a license or renewal of a license under this Act.
(2)

Without prejudice to the provisions of this Part, a person who, upon inspection, is found to be—

(a)

transacting insurance business without a license or renewal of license, under this Act or with persons not so licensed; or
(b)

charging a rate of premium other than that filed with the Commissioner under section 75;
(c)

committing any other business malpractices,

shall, in addition to any other penalty prescribed under this Act, be liable to pay a penalty of two hundred thousand shillings, which shall be paid to the Policy Holders’ Compensation Fund in such manner as may, from time to time, be prescribed by the Authority.

[Act No. 12 of 1994, s. 21, Act No. 9 of 2003, s. 10, Act No. 9 of 2007, s. 59, Act No. 10 of 2010, s. 55, Act No. 10 of 2023, Sch.]
67E.
Powers of inspector
(1)

An inspector may, by notice in writing, require any person who is or has at any time been a director, managing director, secretary, principal officer, manager, officer or employee, agent, accountant, broker, auditor or actuary of the person being inspected to—

(a)

give to the inspector all reasonable assistance in connection with the inspection; or
(b)

appear before the inspector for examination concerning matters relevant to the inspection; or
(c)

produce any books or documents that relate to the affairs of the person being inspected.
(2)

A person who—

(a)

refuses or fails to comply with a requirement of an inspector which is applicable to him, to the extent to which he is able to comply with it; or
(b)

obstructs or hinders an inspector in the exercise of his powers under this Act; or
(c)

furnishes information or makes a false statement which he knows to be false or misleading in any material particular; or
(d)

when appearing before an inspector for examination pursuant to such requirement, makes a statement which he knows to be false or misleading in any material particular,

commits an offence.
(3)

A person convicted of an offence under subsection (2) shall be liable to a fine not exceeding fifty thousand shillings or, in the case of a natural person, to imprisonment for a term not exceeding three years, or to both.
(4)

Where an offence under subsection (2) is a continuing one, the person shall, in addition to the penalty prescribed under subsection (3), be liable to a further fine of one thousand shillings for every day during which the offence continues.
(5)

Where a person convicted under subsection (3) is a body corporate, the Commissioner may, notwithstanding any other penalty imposed under that subsection, apply to court for the winding up of the person.

[Act No. 12 of 1994, s. 21.]
67F.
Expenses under Part

Any expenses incurred by reason of the exercise of any of the powers conferred by this Part in respect of an insurer shall be met by that insurer.

[Act No. 12 of 1994, s. 21.]
67G.
Power to protect the assets of an insurer
(1)

The Authority may, for the purpose of protecting the interests of the policy- holders, assume control of the whole or part of the insurer's assets, and shall register any instrument under the relevant law or take any other appropriate action it may deem necessary.
(2)

The Authority shall hold the directors of the insurer to be jointly and severally liable for the recovery of the assets under subsection (1), where it establishes that the assets of the insurer have been misappropriated.

[Act No. 4 of 2012, s. 34.]
67H.
Offences relating to the management of an insurer
(1)

Any director, principal officer or management staff of an insurer who—

(a)

fails to take all reasonable steps to secure the compliance of a registered or licensed person with this Act;
(b)

fails to take all reasonable steps to secure the accuracy and correctness

of any statement or report submitted under this Act or any other applicable written law;

(c)

fails to supply any information required or effect any directive issued under this Act;
(d)

fails, without lawful j ustification, to settle a Judgment or any claim under this Act; or
(e)

without claim of right takes or converts any property of the insurer to his or her personal or associate’s use or gain, including—

(i) permanently depriving the insurer of the property;
(ii) using the property as a pledge or security;
(iii) receiving the insurer’s property and failing to remit or reasonably account to the insurer; or
(iv) dealing with the property of an insurer in such a m anner that it cannot be returned in the condition in which it was at the time of the taking or conversion,

commits an offence under this Act.
(2)

A person who commits an offence under thi s section shall be liable on conviction—

(a)

on a first offence—

(i) in the case of an individual, to a fine not exceeding five million shillings or to imprisonment for a term not exceeding two years; or
(ii) in the case of a company, to a fine not exceeding ten million shillings; and
(b)

on any subsequent offence—

(i) in the case of an individual, to a fine not exceeding ten million shillings or to imprisonment for a term not exceeding five years; or
(ii) in the case of a company, to a fine not exceeding thirty million shillings.
(3)

The court may make an order for, the payment by the person convicted of an offence under this section of compensation to a person who suffered loss by reason of the offence.
(4)

An order under subsection (3) may be in addition to or in substitution of any other penalty or remedy available to that person.
(5)

The amount of compensation under subsection (3) shall be—

(a)

the loss sustained or adverse suffered by the person claiming compensation; or
(b)

the profits that have accrued to the person liable to pay the compensation.

[Act No. 18 of 2023, s. 3.]
PART VII – MANAGEMENT AND EXPENSES
68.
Approved principal officer to be appointed
(1)

For the purposes of this section "licensed person" means a person licensed under this Act as an insurer, reinsurer, broker, agent, medical insurance provider, insurance surveyor, risk manager, loss assessor, loss adjuster or claims settling agent.
(2)

Every licensed person shall, at all times while he is so licensed, have a principal officer.