KHRC sues insurance regulator over decision to deny some vehicles comprehensive cover

Milimani Law Courts

Kenya Human Rights Commission(KHRC) has moved to court objecting to the decision by some insurance companies to exclude motor vehicles that are more than 12 years old or valued at Sh 600,000 or below from their comprehensive insurance cover. 

The commission also wants the court to issue a conservatory order suspending the decision by insurance companies to unjustifiably increase premiums for both the Motor Vehicle Third Party Cover and comprehensive cover starting the year 2022.

KHRC argues that motor vehicle insurance is mandatory in Kenya and it serves to ensure the safety of the owners, third parties and the public in general, therefore, motor vehicle owners are required to take out insurance which can either be a comprehensive cover or third party cover. 

“Unless the court intervenes and halts the changes, consumers will continue to greatly suffer as their safety and economic interests are compromised”, says the commission. 

According to KHRC, most of the insurance companies have attributed the increase of premiums to a surge of claims, some of which are fraudulent. However, this is not a reason to increase the premiums considering that the law provides safeguards which allows insurance companies to repudiate claims that are not genuine.

“Policy holders are therefore consumers of insurance services and are entitled to the protection of their health, safety and economic interests and vide various mass media and communique sent to their customers, a number of insurance companies have publicly announced an increase of up-to 50% of premiums starting the year 2022 for Motor-Vehicle Comprehensive cover and the third party over”, says the commission. 

The court heard that the Insurance Regulatory Authority and Association of Kenya Insurers are the regulator of insurance business in Kenya and is mandated to among others regulate, supervise and develop the insurance industry. “By virtue of these roles the Respondent controls insurance players and business in Kenya,” argues KHRC.

Ordinarily premiums for the comprehensive cover were/are tabulated using a definite formula which was 4% of the value of the motor-vehicle and any amount above this has to be justified and has to involve consumers/public.