36 LOCAL THE STAR Monday, May 13, 2013

★business UP TO DATE, ACCURATE BUSINESS INFORMATIONNEWS YOU CAN USE, EVERY DAY

BY LOLA OKULO

INSURANCE product adver-tisements, employees and agents will face closer scrutiny brought on by a new guidelines aimed at protecting customers from de-ception.

In a bid to make the insurance industry players more trusted by the market, Insurance Regula-tory Authority has issued new rules that come into effect from June 30.

“The objectives of this guide-lines are to strengthen public trust and consumer confidence in the insurance sector and mini-mise the risk of insurers adopt-ing business models that are un-sustainable or pose reputational risk,” states the document.

The rules place the ultimate re-sponsibility of the fair treatment of customers on the board and senior management of a company and direct that they ensure that remuneration and commissions paid to employees and agents will not lead to unfair treatment

to customers.Theft by insurance agents and

employees topped the IRA fraud report for last year.

The report showed that out of the 143 cases received by IRA fraud investigation unit last year, 30 were due to theft by agents while out of all the cases re-corded, theft by employees of in-surance companies involved the highest amount of money with a total of Sh184.7 million. Theft by agents involved Sh65.8 mil-lion.

“Appropriate attention should be paid to the recruitment of staff, intermediaries and service providers who meet high stand-ards of ethics and integrity,” states section 4 (v) of the new guidelines.

Section 4 (vi) adds: “Policies and strategies on remuneration and reward for both the insurer’s staff, intermediaries and service providers, shall promote fair treatment of customers.”

Company management will be expected to review performance

of agents and employees and file a report periodically.

The IRA has also directed that all insurance companies that are running advertisements on any media platform provide for an independent review of these mes-sages to determine their factual-ity and ensure message clarity so as not to mislead the customers.

“An insurer shall before pro-moting an insurance product, take reasonable steps to ensure that the information provided is accurate, clear and not mislead-ing,” states part 5.2 (i) of the rules.

The IRA has issued these guide-lines to improve the insurance industry’s negative image with a market penetration rate at a low of 3 per cent.

Insurance firms have for years faced difficulty in selling their products due to lack of trust .

This has been caused by a market perception of contract breaches arising from unclear policies and disregard for the fine print in policy documents.

BY JUSTUS OCHIENG

THE high rate of bad loans at the Kisumu Teachers Sacco has eaten into its pro!tability, the an-nual general meeting was told on Saturday.

Chief executive Joseph Oganga said the default rate currently at its highest is an impediment to the organisation’s growth.

Oganga said KITE has a loan de-fault of Sh39 million saying a good

number are members who schemed to take loans with direct intentions of defaulting.

“These include senior teachers, head teachers and senior Kenya National Union of Teachers of-!cials,” he said.

This, he said, has made the Sacco’s pro!t to drop from Sh7.8 million in 2011 to Sh6.6 million last year because the projected income on these loans could not be realised.

The CEO revealed that the worst affected section is front of!ce op-eration advances where the interest expected from loans dropped by Sh2.8 million due to defaults.

He said this coupled with high interest rates by commercial banks has affected pro!tability.

Oganga added that KITE will now go after guarantors to recover the loans a move he said has not gone down well with many mem-bers.

Kisumu teachers’ sacco hit by bad loans

IRA issues new rules to protect customers

Can YOU outsmart the expert?

ALY KHAN’S STAR

PORTFOLIO

I am now showing my age but in the 1990s, when I was in London and I had a Maltese friend called Darien and he had carved out a career in celebrity promotion I would call him from my desk and say:

‘’So Darien who are we hanging out with this weekend?’I have spent the weekend with all kinds of folks from

Robert De Niro to Donald Trump to Cosima von Bulow and one of my most surreal and most memorable evenings was with the wonderful pop group Deee-lite who sang the wonderful song Good Beat amongst others.

The Song starts, ‘’Depending on how you see a thing...’And for eternity, the perception gap about Africa has been

as wide as the Rift Valley at its widest point. There is the Africa of the imagination and Africa has been a trigger word for peoples imagination the world over. And the nature of the international media was to look for sustenance for that imagination. And of course, for the longest time, there was plenty of content to sustain that. Now, of course, there is a collision between that type of reporting and folks on social media and Nima of CNN encountered this and how with the #SomeonetellCNN hashtag. This social media led push back rebuttal scaled big and represented a tipping point.

Ernst and Young issued their Africa Attractiveness survey 2013 last week in which they noted; A total of 70 per cent respondents with an established business presence in Africa said that Africa’s attractiveness as a place to do business has improved over the past year versus 31 per cent of those with no business presence. Similarly, those already doing business on the continent ranked Africa as a more attractive investment destination than every other region in the world, other than Asia while those with no business presence ranked Africa last by some distance.

That is the Africa perception gap right there. The know nothings have filed Africa under the ‘No need to know anything further about’ and not worthy of our attention. It is a very wide gap. You would not find a similar response to India or China, which are two other markets of comparable size.

Staying with E&Y, they also noted that the fastest growing FDI in Africa since 2007 has been intra-African FDI which has averaged a compound rate of 32.5 per cent. The emerging markets FDI into Africa over the same period has posted a 20.7 per cent compound rate of growth and investment from developed markets has grown 8.4 per cent. This informs us of two related things. Firstly, the know somethings, that is us Africans are increasingly putting our money where our mouth is and secondly, this is exactly as it should be because we are only going to seriously motor when we back ourselves.

Mohamed El-Erian [who controls more funds than a number of countries’ GDP in Africa] wrote in foreign policy ‘’Believe the hype. Africa’s rise is real’’ and concluded with this comment ‘’Still a cynic? Do not take my word for it – just follow the money.’’

And this brings me back to my favourite financial writer Edwin Lefevre who wrote ‘’The tape is your telescope.’’

This year, the Ghana Securities Exchange has returned 53.05 per cent so far and is probably the best performing index in the world. Nigeria’s all share index is plus 31.26 per cent, the Nairobi all share is plus 30.99 per cent. If you are not paying attention then you are not following the money. If you are not following the money, then the tape is not your telescope and you have no business investing in the markets.

Shares go up and down and readers are advised that this column represents Mr Satchu’s personal opinions.

AFRICA’S PERCEPTION GAP STILL VERY WIDE

COVERED: Motor accident insurance is among one of the most popular policies since it is mandatory.

The fastest growing FDI in Africa since 2007 has been intra-African.