As we have previously mentioned, new minimum rates under Fire, Engineering and Bonds have been introduced in Kenya since 1st March 2021. Lots have been said about these, excessive, bad timing and ambiguous, but they have been implemented, and many clients are faced with increasing insurance costs.
JWS started addressing this in December last year when we were first notified of the proposed increases, and so far our clients have not been hit too hard, and new clients have approached us and we have alleviated the increases in other ways.
One of the most popular ideas that Brokers have, is to suggest clients to sign up for a Long Term Agreement (LTA). In effect, you agree to renew your insurance policies with the same Insurer for the next 3 years and, in return you will get a 15% discount on certain policies/sections.
So, what’s the catch you may ask?
There shouldn’t be a catch. You agree to renew and if the insurers rates or terms change at next renewal, then they break the agreement and you are free to move to another Insurer. In effect, Insurers are committing to the same terms for 3 years, which allows Policyholders to budget.
However, and this is where I say BEWARE
We have just been sent the new proposed LTA agreement which has been produced by reinsurers and is being adopted by the local market. Fundamentally, the agreement states, in non-‘legaleese’ language, that:-
‘the Policyholder agrees to sign up for three years, gets the 15% discount, but at any time, the Insurer can increase their rates and terms by any amount whatsoever, and you still have to renew with them!’. It then goes onto say:-
‘if you break the agreement, the Insurer can sue you and you agree to meet all the legal costs’!
Absolutely true and we have raised the issue with Insurers and they agree it is badly worded and they will see what they can do. With JWS, you get our LTA wording, which is as it should be, without any catches, and any change to terms breaks the agreement. So, either use JWS or at the very least, have the new wording changed.
As always, we are here to assist you. If you have any questions on the above, please email us on [email protected] or call us on 254 (0)709 445 000.