Kenya Insights

Tag: Insurance Regulatory Authority (IRA)

  • Pressure Mounts on CS Mbadi to Freeze Pay to Insurance Boss Whose Term Expired but Still Draws Salary

    Pressure Mounts on CS Mbadi to Freeze Pay to Insurance Boss Whose Term Expired but Still Draws Salary

    Legal challenge threatens Treasury action as Insurance Regulatory Authority CEO continues in office three months past constitutional limit

    Nairobi, Kenya – May 22, 2025 – Treasury Cabinet Secretary John Mbadi is facing increasing pressure to halt payments to Godfrey Kiptum, the Commissioner of Insurance at the Insurance Regulatory Authority (IRA), whose second term officially expired on February 28, 2024, yet continues to draw a full salary and exercise authority.

    A lawyer, Suleiman Bashir, has issued a seven-day ultimatum to the Treasury, demanding an immediate stop to Kiptum’s remuneration and the initiation of a recruitment process for a new commissioner, threatening legal action for misuse of public funds if no action is taken.

    The controversy centers on Kiptum’s extended tenure at the insurance regulator, which has now stretched beyond nine years across multiple appointments.

    His current predicament stems from what Bashir describes as a clear violation of Kenya’s Insurance Act, which explicitly limits commissioners to two three-year terms.

    Kiptum first assumed the role in an acting capacity in 2016, serving for three years before his confirmation for a full three-year term.

    In 2022, he secured what should have been his final reappointment for a second term that officially concluded on February 28, 2025.

    “The continued occupation of this office beyond the statutory limit not only violates the Insurance Act but represents a flagrant misuse of taxpayer resources,” Bashir stated in his legal notice.

    “Every day Mr. Kiptum remains in office and draws a salary is a day of illegal expenditure of public funds.”

    Insiders suggest Kiptum’s prolonged stay may be facilitated by high-level political protection.

    Sources familiar with the matter indicate he maintains close ties with Head of Public Service Felix Koskei, with whom he allegedly shares village roots.

    Head of Public Service, Felix Koskei
    Head of Public Service, Felix Koskei

    This connection is believed to have shielded him from previous attempts to remove him from office.

    The protective influence became apparent in 2024 when former IRA Board Chairman Mwanga Mabonga attempted to place Kiptum on compulsory leave pending investigations into alleged irregular dealings.

    The move was swiftly reversed, Mabonga was subsequently removed from his position, and Kiptum remained firmly in place.

    The standoff represents more than just an employment dispute—it highlights broader concerns about institutional integrity and adherence to constitutional term limits across Kenya’s regulatory landscape.

    The Insurance Regulatory Authority, established to oversee Kenya’s growing insurance sector worth billions of shillings, has found itself at the center of a governance crisis that could undermine public confidence in financial regulation.

    Bashir’s legal challenge has been strategically copied to multiple oversight bodies, including the Public Service Commission, the Ethics and Anti-Corruption Commission, and the IRA Board itself, effectively putting all relevant institutions on notice about the irregular situation.

    The pressure on Treasury CS Mbadi intensifies as the seven-day ultimatum approaches its deadline.

    The lawyer’s notice explicitly demands the immediate cessation of all salary payments, allowances, and executive benefits to Kiptum, along with the commencement of a proper recruitment process to fill the position legally.

    “The Treasury cannot continue to facilitate what amounts to theft of public resources,” Bashir warned. “If they fail to act within the stipulated timeframe, we will have no choice but to seek judicial intervention to protect taxpayer interests.”

    As the legal deadline approaches, all eyes are on Treasury CS Mbadi’s response.

    Failure to act could result in court proceedings that may compel immediate action while potentially exposing the Treasury to claims for restitution of funds paid during Kiptum’s illegal tenure.

  • Law Firm Demands Immediate Removal of Insurance Regulatory Authority CEO

    Law Firm Demands Immediate Removal of Insurance Regulatory Authority CEO

    A city law firm has issued a formal demand for the immediate cessation of office by the Commissioner of Insurance and CEO of the Insurance Regulatory Authority (IRA), citing what they describe as an “illegal stay in office.”

    In a strongly-worded letter dated April 29, 2025, Bashir & Associates Advocates notified the Cabinet Secretary for the National Treasury and Economic Planning, Hon. John Mbadi Ng’ongo, that Mr. Godfrey Kiptum’s continued occupation of the position is unlawful.

    According to the legal document, which was marked “URGENT” and received by the National Treasury on April 30, Kiptum’s tenure officially expired on February 28, 2025, following his reappointment to serve a second three-year term.

    “Kiptum’s continued stay in the aforementioned office is in contravention of the Insurance Act, Cap. 487 Laws of Kenya and the principles of public service as enshrined in the Constitution of Kenya,” the letter states.

    The law firm asserts that Kiptum first rose to the position in an acting capacity in 2016 following his predecessor’s exit, served three years in that capacity, and then served a further six years, bringing his total period in office to over nine years.

    Citing Section 3E(5) of the Insurance Act, the letter emphasizes that the law expressly limits a Commissioner’s term to three years with eligibility for only one reappointment for a further three-year term.

    “Notably, Kiptum’s continued stay in office is not only irregular but constitutes misappropriation of public funds through the unlawful payment of salary, allowances, and other executive benefits,” the letter states.

    Bashir & Associates has demanded the immediate cessation of payments to Kiptum and the prompt commencement of the recruitment process for a new Commissioner/CEO “in accordance with the law.”

    The law firm has given the Cabinet Secretary seven days to comply with their demands or face legal proceedings, warning that such action would proceed “without further reference” and at the Cabinet Secretary’s “own risk as to legal costs, reputational damage, and all other consequences attendant to unlawful public administration.”

    The letter was copied to multiple government entities including the Chairperson of the IRA Board of Directors, the Principal Secretary of the National Treasury, the Chairperson of the Public Service Commission, the Association of Kenya Insurers, and the Ethics and Anti-Corruption Commission.

    Neither the National Treasury nor the Insurance Regulatory Authority had issued a public response to the allegations at the time of publication. Attempts to reach Mr. Kiptum for comment were unsuccessful.

    The Insurance Regulatory Authority is the government agency responsible for regulating, supervising, and developing the insurance industry in Kenya.

  • How Financial Advisors And Firms Mislead Investors

    How Financial Advisors And Firms Mislead Investors

    A growing number of Kenyans are falling victim to deceptive sales tactics employed by financial advisors and firms, it has been established.

    These unscrupulous practices, often referred to as “mis-selling,” involve misleading investors into purchasing unsuitable investment products.

    This often involves providing inaccurate or incomplete information, or outright deception, for example, financial advisors recommending a high-risk investment to conservative investors without fully explaining the risks involved.

    Victims of these schemes have reported significant financial losses after being lured by promises of high returns and low risk.  Some clients who spoke on condition of anonymity for fear of victimisation raised concerns against asset management firms and agents, alleging that they were steered toward high-risk investments inappropriate for their financial situations.

    In many cases, the investors said they were pressured into high-risk investments that did not align with their financial goals or risk tolerance.

    Many investors said they were enticed by promises of guaranteed returns and were not adequately informed about the risks. Consequently, these investors faced or have already incurred substantial losses due to fluctuations in asset values and other unfavourable market conditions.

    Some customers said they purchased policies believing them to be simple savings plans, only to find out later about substantial penalties for early withdrawal and exaggerated returns.

    A trend we studied showed that increasingly, insurance agents are venturing into selling investment products, often without the proper qualifications.

    Analysts who we interviewed warned mis-selling can have serious consequences for both the consumer and the business, as it erodes investor trust and can lead to financial loss, damage to reputation, and even legal action.

    To combat this issue, regulatory authorities like the Capital Markets Authority (CMA) and the Insurance Regulatory Authority (IRA) are now stepping up efforts to protect consumers and have moved to implement stricter regulations, including mandatory certification for financialadvisors and have issued warnings against fraudulent schemes.

    These authorities are now implementing stricter regulations and increasing oversight of financialinstitutions.

    CMA has emphasised the importance of working with licensed entities and approved products to protect investors.  The insurance sector has also been affected by mis-selling practices. Some individuals have inadvertently purchased life insurance policies believing them to be simple savings plans. While many hold the Certificate of Proficiency (COP) for insurance sales, few possess the CMA certification required for investment products.

    IRA is understood to be working to address this rising menace through stricter regulations and increased consumer awareness.

    The Fund Managers Association (FMA) in response to concerns about this vice has now called for heightened industry standards and investor education.

    Fred Mburu, the CEO of FMA, which represents fund managers in Kenya, said in an interview: “Adherence to best practices and keeping consumers well-informed is essential for building trust and advancing Kenya’s capital markets. This is critical for our economy’s growth.”

    Despite FMA members committing themselves to a code of conduct aligned with industry best practices, prioritising transparency and investor protection, Kenya’s investment landscape is currently facing challenges from the mis-selling of investment products or services.  Like in many other markets, mis-selling in Kenya has grown across various financial products, including insurance, mutual funds, stocks, bonds, and retirement savings plans.

    CMA said it has taken steps to counter mis-selling by issuing public warnings about fraudulent schemes and enforcing regulations.  A CMA spokesperson said in an interview Kenya’s regulatory framework is robust, aiming to prevent mis-selling and ensure all fund managers and customer-facing employees are properly qualified and trained.

    These employees are required to complete a Securities Industry Certification Program, offered in collaboration with the UK-based Chartered Institute for Securities & Investment (CISI), within 12 months of appointment. For specific job functions, membership with the Institute of Certified Investment and Financial Analysts (ICIFA) is also mandatory.

    To protect investors further, CMA advises the public to work only with licensed entities and approved products, listing all licensed entities on its website.

    “The Capital Markets (Collective Investment Schemes) Regulations, 2023 and the Conduct of Business (Market Intermediaries) Regulations, 2011 establish robust frameworks to prevent mis-selling in Kenya’s capital markets. These regulations ensure that fund managers and market intermediaries uphold ethical standards and maintain transparency in their interactions with clients,” said the regulator.

    To further protect investors, the Capital Markets Authority said it “urges the investing public to only invest through licensed entities and approved products. A regularly updated list of licensed entities is available on the Authority’s website.”