The Association of Insurance Brokers of Kenya (AIBK) has moved to court to challenge the law that stipulates penalties on insurance fraud.

The association has sued the National Treasury Cabinet Secretary, the Attorney-General and the Insurance Regulatory Authority while seeking to stop the implementation of the Insurance (Amendment) law.

According to the firms, amendments to the bill did not balance the rights of all industry players, frustrates government policy of growing insurance penetration and criminalises handling of premiums by insurance brokers.

Through their lawyer Paul Muite, they say the bill that was assented to on July 5 also seeks to bar brokers from collecting premiums.

“The implementation of the contentious law will have far-reaching implications that will result in wiping out the business on insurance brokerage in Kenya as well as jeopardise livelihoods,” said Mr Muite.

MPs passed the bill following lobbying by insurance firms on reports that brokers delay remitting of premiums and that their agents engage in fraud.

But now the brokers are seeking court protection, saying the new law puts them at risk of being arrested and prosecuted following its gazettement on July 19.

Usually, brokers and agents act as intermediaries between policyholders and the insurance companies, advising buyers on products, policies available, and collect premiums.

In filed court documents, the association alleged that the sector will be plunged into a crisis leading to the loss of business and revenue among its members.

It also alleged that at least 5,000 individuals whose livelihood as well as families depend on them will be affected.

The group has termed the disputed law as punitive and discriminatory against the petitioners’ members.

“It is in the interest of justice that the court issues [sic] an order to prevent implementation of this disputed law which amounts to harassment, intimidation and interference with our right to trade without undue infringement of the public’s right to access insurance,” said Eliud Adiedo, the association’s chief executive officer.

They also claim that if implemented, it will result in the curtailment of the public’s right to access insurance across the country, including remote areas without physical presence of insurance companies.