Small Insurance brokers have described a regulation passed by Central Bank to regulate their activities as intended to throw them out of the trade.
Speaking to The Sunday Times on condition of anonymity, the brokers described the Rwf50m share capital requirement as being too high and not helpful to an industry that is still young.
“Very few businesses will meet this requirement…and it is not good news for the trade,” one of the brokers lamented.
In July, Central Bank Governor, Francois Kanimba issued a number of instructions regulating insurance intermediaries, brokers, agents and loss adjusters.
The regulation compels insurance brokers to have a share capital not less than Rwf 50m, proof of a professional indemnity insurance policy of Rwf 200m per year and Rwf20m against any damage caused to the insurer or policy holders.
“Agents must not have been adjudged bankrupt and must not be compounded by creditors,” the document reads in part.
It bars insurers from entering contracts with unlicensed insurance brokers and agents.
The insurer must also disclose the commission rate to the agents and brokers.
The regulation requires industry players to keep prudent books of accounts that must be audited by an external auditor approved by the Central Bank.
The head of non banking financial institutions supervision at Central Bank, Joy Ntare, defended the move saying the draft was discussed by stakeholders and their considerations were all taken care of.
“Nothing is going to change. It is going to be published in the official gazette,” she said.