No 50 Of 2016 - as Plain Text by MWakili

SPECIAL ISSUE Kenya Gazette Supplement No.

200 (Acts No.

50) REPUBLIC OF KENYA KENYA GAZETTE SUPPLEMENT ACTS, 2016 NAIROBI, 30th December, 2016 CONTENT Act PAGE The Insurance (Amendment) Act, 2016.1201 0U CL F0 L& .11 JAN 7P.

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Box 10443-00100 NP'POBi, KThYA PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTER, NAIROBI 1201 THE INSURANCE (AMENDMENT) ACT, 2016 No.

50 of 2016 Date of Assent: 23rd December, 2016 Date of Commencement: 13th January, 2017 AN ACT of Parliament to amend the Insurance Act ENACTED by Parliament of Kenya, as follows - This Act may be cited as the Insurance Short title.

(Amendment) Act, 2016.

Section 2 of the Insurance Act, in this Act referred Amendment of ,, section 2 of Cap.

to as the "principal Act", is amended n the definition of i 487.

the expression "insurance business" by inserting the following new paragraph immediately after paragraph (c) "(d) takaful insurance business based on group participation guaranteeing each of the members against defined loss or damage." The principal Act is amended by inserting the Insertion of new following new section immediately after 19 section 19A to Cap.

487.

Takaful insurance business.

19A.

(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.

Section 25 of the principal Act is amended in Amendment of subsection (1) section 25 of Cap.

487.

(a) by deleting paragraph (a) and substituting therefor the following paragraph "(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 1202 No.

50 Insurance (Amendment) 2016 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) by inserting the following new subsection immediately after subsection (1)- "(1A) The capital provided under subsection (1)(a) shall not rank in priority to policyholders' interest at the time of liquidation." 5.

The principal Act is amended by repealing section Repeal and 41 and substituting therefor the following section replacement of section 41 of Cap.

487.

Capital adequacy.

(1) An insurer carrying on 41.

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.

6.

The principal Act is amended by repealing section Repeal and 42 and replacing it with the following new section replacement of section 42 of Cap.487.

Determination of capital required.

42.

(1) In determining the capital required, an insurer shall take into consideration the capital for insurance risk, market risk, credit risk and operational risk; and 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 * 1203 2016 Insurance (Amendment) No.

50 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.

43.

7.

The principal Act is amended by repealing section Repeal of Section 43 of Cap.487.

8.

Section 57 of the Insurance Act is amended - Amendment of Section 57 of (a) in subsection (1), by- Cap.487.

deleting the words "who carries on long term insurance business"; inserting the words "by the Authority" immediately after the words "prescribed" appearing in paragraph (b); deleting the proviso appearing immediately after paragraph (b); (b) in subsection (2), by- (i) deleting the words "to his long term" appearing in paragraph (a); (ii) deleting paragraph (b) and substituting therefor the following paragraph "(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." (iii) inserting the following new paragraph immediately after paragraph (b) - "(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"; (d) in subsection (3), by- 4 1204 No.

50 Insurance (Amendment) 2016 inserting the words "by the Authority" immediately after the word "prescribed"; deleting the words "of its long term insurance business as on the date on which the investigation is made"; (e) in subsection (5), by deleting the words "determined in accordance with regulations" and substituting therefor the words "as prescribed by the Authority".

9.

Section 58 of the principal Act is amended - (a) in subsection (1), by deleting the words "long Amendment of ,, section 58 of Cap.

term; 487.

(b) by deleting subsection (2) and substituting therefor the following subsection - "(2) The basis of valuation of technical reserves adopted shall be as prescribed by the Authority"; (c) in subsection (3), by- deleting the words "of a statutory fund"; and deleting the words "the minimum basis prescribed" and substituting therefor the words "the prescribed basis"; (d) in subsection (4), by- deleting the words "relating to a statutory fund"; and deleting the words "the minimum basis prescribed" and substituting therefor the words "the prescribed basis"; and (e) in subsection (8), by deleting the words "long term".

10.

Section 115 of principal Act is amended in Amendment of subsection (7) by deleting the words "minimum basis section 115 of prescribed" appearing in the definition of the term "proper Cap.

487.

basis" and substituting therefor the words "basis prescribed by the Authority".

11.

The Second Schedule to the principal Act is Amendment of amended in paragraph (2)(b) by deleting the word the Second Schedule to Cap "minimum" and substituting therefor the word 487.

"maximum".

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