INSURANCE companies have been warned against charging less premium for policies. Evelyn Nkalubo, the acting commissioner for insurance, argued recently that the vice undermined the insurersâ€™ capacity to pay claims.
â€œIt is important for players to stick to the set premium rates because if you go below, then you are venturing into troubled waters,â€ Nkalubo said.
The commissioner was reacting to the cutthroat competition insurance companies face as they struggle to retain business in a far smaller insurance market than the number of players.
â€œThe insurance market today served by 20 companies writes an annual gross premium of only sh100b. This can be an annual income of a single bank.
â€œThis situation has seen many players resort to price competition to woo customers from their competitors in order to survive,â€ a player, who declined to be named, said.
The source said the practice not to adhere to the set minimum standards was unfair to the other players who respected the law.
Insurers warned over lower charges