A top insurance firm in Uganda is in trouble after senior agents started quitting and others stealing customers’ premiums (money paid by policy holders), Business Focus exclusively reports.
ICEA (Insurance Company of East Africa) Life Assurance is the company under fire.
A source privy to the rot at ICEA Life Assurance reveals that unfair policies at the company have left agents financially constrained so much so that some collect the money physically from policy holders and ‘eat’ it.
The source of trouble is the ‘Claw back’ policy on ‘lapsed policies’ where ICEA Life recovers commission on already paid to agents in case a customer stops paying premiums, a highly credible source revealed.
“A lapsed policy is when a customer takes three months without paying premiums. It means the client isn’t still on the insurance cover. When he or she pays the outstanding balance, they are reinstated,” a source said, adding: “When a client lapse, the commission the agent got on him will be recovered from him in full and the customer’s premiums are not refunded.”
While other insurance companies don’t reinstate lapsed policies, at ICEA Life they can be reinstated even after 10 months without paying, the source said.
They revealed that ICEA top management blames the agents for ‘bad’ selling, which results into such customers failing to pay their monthly premiums.
However, some agents Business Focus talked to apportioned blame on the ‘bad economy’.
“A number of agents have been heavily frustrated whereby some [agents] have a commission schedule that is in negative – and are earning nothing at the end of the month,” the source said, adding: “One can have a commission schedule of Shs1million when the claw back schedule is Shs1.3million. They will first recover the Shs1million and wait to recover the balance in the following month.”
The source revealed that this policy has hit the agents hard in the last two years which is why some collect the money from their customers and eat it. The source said that some do it hoping they would pay it back when they get commission but sometimes they do or don’t do it at all.
“Recently one agent ate Shs2.5million from a customer and was arrested,” the source said.
This Website understands that a number of agents (names withheld) have been arrested and fired in connection with this saga.
“About 50 agents have quit to join rivals mainly Prudential, UAP, CIC that don’t have claw back policy. Many senior agents have quit because they were demoralized,” the source said.
After noticing that agents were eating customers’ premiums, ICEA Life in January this year started sending random messages to its clients, informing them of their outstanding premiums. Many were also reminded of how they were going to be removed from their life covers after taking long without paying their monthly premiums.
The source reveals that the company was shocked to learn that millions of money from clients had been eaten by agents.
In 2017, ICEA Life dismissed all agents after they protested the unfair ‘claw back’ policy and asked them to reapply. Some did, others didn’t. The company has been in crisis meetings of late in order to arrest the situation that has seen its performance in the last two years decline.
It should be noted that agents don’t receive any facilitation from the company apart from the training. This is because their contract is not based on employer-employee relations. They are given the job as middlemen and earn commission.
This site further understands that at ICEA Life, when an agent signs a client whose policy runs for over five years, they are given 40% of the monthly premium for the first one year.
In the 2nd and 3rd year, they are paid 20% and 10% respectively. Thereafter, the agent is paid 5% of the monthly premium paid by the customers until the policy expires.
ICEA boss speaks out
In an interview with Business Focus, Emmanuel Mwaka, the CEO at ICEA Life said there was no money scandal at ICEA.
He said that premium embezzlement by agents is an industry issue that is being addressed at that level.
“There is a directive not to give cash to agents. As any other business, there are some bad apples tainting the name of very good and honest agents,” Mwaka said.
He added: “You should note that agents are governed by a code of conduct and are trained rigorously on issues of integrity before being licensed by the regulator. We continue to educate our clients not to give cash premiums to our agents but rather use the available options of premium payment such as mobile money transfers, and bank transfers to the company’s bank accounts.”
He revealed that cash can only be collected at the designated cash offices in the branches for which an official receipt is given to the client.
“In cases where a client’s premiums have been misappropriated by the agent, the disciplinary process is followed. Agents are typically self employed professionals who singularly determine how much they earn in spite of any anti-churning measures,” he said.
“We call upon all clients to regularly review their policy statements and revert for clarity. In the same light, we request agents to adhere to the core values of the profession in executing their duties,” he added.
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