The corona virus pandemic has wreaked havoc around the world. This has led to massive job losses across all sectors of the economy. Insurance policy holders facing financial difficulties due to the Covid-19 pandemic in Kenya have something to smile about as they will now get a relief after the insurance regulatory commission has granted them a grace period for payment and renewal of premiums.
The Insurance Regulatory Authority (IRA) said that insurers will be required to give their clients concessions such as deferral of payments or renewal of premiums, including considering offering premium holidays and the option of staggered payments wen premiums are expected.
In a statement on Tuesday April 21st 2020, IRA CEO Godfrey Kiptum said “Insurers should avail policy holders a three-month grace period. The grace period may be over and above any contractual premium holidays already in place for existing policies,”
In the life insurance segment, policy contracts have specific commencement dates and maturities and customers have to pay, failure to which they lose the policy in the first three years or get refunded a small portion of the premiums they have been paying, also known as a surrender value.
Life insurance policies normally give clients a month’s grace period and the extension offered by the IRA would come as a blessing to most customers who have lost work, faced pay cuts or closed businesses as a result of the coronavirus pandemic. The Life insurers will apply a concept called Re-dating where the start date of the policy will be pushed ahead hence affecting the Maturity which will be extended by a similar number of months.
This will be monitored as the country battles the corona virus pandemic.
