How Insurance Companies Can Simplify eTIMS Compliance with Reverse Invoicing
How eTIMS Reverse Invoicing Can Solve Insurance Compliance Challenge
Every month, an insurance company processes thousands of transactions behind the scenes.
A motor insurance claim is approved in Nairobi.
A broker earns a commission in Kisumu.
A repair garage submits a bill in Nakuru.
A medical assessment is completed in Mombasa.
An agent closes a policy sale in Eldoret.
Individually, these transactions may seem small. Collectively, they form the operational heartbeat of the insurance industry — and with the rollout of eTIMS in Kenya, each one carries a new compliance obligation that many companies were not fully prepared for.
The Compliance Problem No One Anticipated
When eTIMS launched, many insurers initially believed they were largely unaffected. And in some ways, they were right. Under the Tax Procedures (Electronic Tax Invoice) Regulations, 2024, financial institutions are exempt from issuing eTIMS invoices for several regulated income streams:
Insurance premiums
Pension management fees
Unit trust management fees
Money market fund fees
Reinsurance commissions
For many insurers, this sounded like relief. But there was a catch: while insurance income may be exempt, expenses are not automatically excluded from compliance obligations.
Suddenly, finance teams were asking difficult questions:
How do we manage compliant documentation for thousands of broker commissions?
What happens when a small agent cannot issue an eTIMS invoice?
How do we support deductible expenses during a tax audit?
How do we maintain compliance without slowing down operations?
And this is where the real challenge began.
The Insurance Ecosystem
Insurance companies do not operate alone. Behind every policy sold is a network of brokers, agents, assessors, investigators, garages, hospitals, and consultants. Many are small businesses processing high transaction volumes — and many were not equipped for the technical demands of eTIMS.
Historically, issuing invoices for commissions was not standard practice across the market, especially among smaller intermediaries. But the Kenya Revenue Authority (KRA) clarified that where applicable, commission expenses should still comply with eTIMS requirements. For insurers, the bigger the company, the bigger the compliance burden becomes.
Reverse Invoicing: a practical solution
The Tax Laws (Amendment) Act, 2024 introduced a mechanism called reverse invoicing — and it solved a very practical problem. Instead of waiting for every individual broker, assessor, or garage to generate invoices manually, insurance companies can now issue invoices on behalf of suppliers, with their consent.
Rather than chasing paperwork across dozens of providers, insurers can centralise invoice generation, automate compliance processes, and maintain proper tax documentation internally.
In practice, this means a finance team processing commissions for hundreds of agents can generate compliant eTIMS invoices automatically reducing manual follow-up, improving reconciliation speed, and cutting audit exposure significantly.
Why Reverse Invoicing Matters for Insurance Companies
For many insurers, reverse invoicing is no longer just a compliance tool. It is becoming a business efficiency strategy. Companies are increasingly seeing benefits such as:
Better payment visibility
Clearer oversight of all agent, broker, and third-party payments.
Reduced Tax Disputes
Properly supported expenses are less likely to be challenged in audits.
Operational Efficiency
Automation removes repetitive administrative tasks across the finance team.
Accurate Reporting
Standardised invoice generation improves consistency across financial records.
Audit Readiness
Centralised documentation creates a more defensible compliance framework.
The shift from reactive to proactive compliance
The insurance industry has always relied on trust, systems, and relationships. Technology is now an equally important pillar. As eTIMS continues to evolve, compliance cannot remain a fragmented, manual process, and the insurers investing in smarter systems today will be better positioned to scale efficiently, maintain audit readiness, and build stronger operational visibility across their ecosystem.
Reverse invoicing is helping insurers move from reactive compliance to proactive operational control. For an industry built on high-volume transactions and extensive intermediary networks, that shift could not have come at a better time.
See how DigiTax reverse invoicing works in practice
Simplify broker, agent, and supplier eTIMS compliance — without adding operational overhead.