NAIROBI, Kenya, January 12 – The High Court has temporarily halted the planned increase of motor vehicle insurance premiums by up to 50 percent.
In his ruling, Justice James Makau also suspended the decision by insurance companies to exclude certain categories motor-vehicles from their Comprehensive Cover.
This follows a petition filed by the Kenya Human Rights Commission (KHRC) which accused the Insurance Regulatory Authority (IRA) of failing to protect the public and policyholders from such an increase.
Justice Makau stated that the orders will be in effect until the hearing and determination of the petition by the human rights body.
“I have considered the petitioners’ grounds in support of the application and oral submissions by both parties upon careful evaluation of the same, I find that the petitioner has demonstrated a prima facie case with a likelihood of success,” the Judge said.
The matter is due for mention on April 14, 2022. The court gave the respondents, IRA and the Association of Kenya Insurers (AKI) 21 days to file and serve their responses to the petition.
Consumers Federation of Kenya (COFEK), Kenya’s independent, self-funded, multi-sectorial, non-political and apex non-profit Federation committed to consumer protection, education, research, consultancy, litigation, anti-counterfeits campaign and business rating on consumerism and customer-care issues will be enjoined in the case.
The court ruling has dealt a blow to the IRA which was pushing for increased premiums to prevent underwriters from making losses.
According to the 2020 insurance report released by AKI, the non-life insurance penetration in Kenya was 1.29 per cent in 2020 a decrease from the 1.37 per cent recorded in 2019.
Non-life insurance gross premium amounted to Sh132.70 billion in 2020, a slight decrease from Sh133.45 billion recorded in 2019.
The report indicated that medical and motor insurance classes maintained a leading position in terms of contribution in non-life insurance business premium at 33.43 per cent and 33.71 per cent respectively.
Underwriting results improved from a loss of Sh3.27 billion in 2019 to a loss of Sh2.33 billion in 2020.
“This could be due to decrease in incurred claims and management expenses due to COVID-19. Medical insurance recorded the highest underwriting profit of KES 1.70 billion which may be attributed to people staying away from hospitals resulting in fewer hospital visits due to fear of COVID -19,” the report read.
The combined ratio for medical business decreased from 99.26 per cent in 2019 to 94.44 per cent in 2020, giving insurers some cushioning against the squeeze in their top-line earnings.
IRA is a statutory government agency established under the Insurance Act (Amendment) 2006, CAP 487 of the Laws of Kenya to regulate, supervise and develop the insurance industry.
It is governed by a Board of Directors which is vested with the fiduciary responsibility overseeing operations of the Authority and ensuring that they are consistent with provisions of the Insurance Act
