The High Court has temporarily stopped insurance companies from raising premium charges for motorists. In a case filed by the Kenya Human Rights Commission (KHRC), the High Court also ruled that motorists can seek comprehensive insurance cover for vehicles older than 12 years.
In his ruling, Justice James Makau said that the order will remain in force until the case is heard and determined.
Insurance companies had announced that the minimum premium for all cars would be Ksh45,000 for vehicles valued at under Ksh1 million, excluding cars older than 12 years that would not get comprehensive insurance from some service providers.
Other service providers indicated that they would only provide comprehensive cover to vehicles valued at more than Ksh600,000 and not older than 12 years.
Under normal circumstances, insurers charge four percent of the vehicle value as premiums, with any extra charge having to be justified.
“Considering the mandatory nature of motor vehicle insurance, then the said service has to be offered in a manner that protects consumers’ health, safety and economic interests. To unjustifiably increase premiums without consultations and justification violates the rights of consumers. To further exclude a specific category of vehicles from comprehensive insurance cover without justification equally violates the rights of consumers,” argued KHRC lawyer Kelly Malenya.
Malenya also faulted the Insurance Regulatory Authority (IRA) for sanctioning the hike, which was supposed to take effect on January 1, 2022.
“The respondent (IRA), being the regulator and supervisor of insurance business in Kenya, has violated its fiduciary duty it owes to policyholders and the public in general for permitting or condoning insurance companies to unjustifiably increase premiums up to 50 percent with no public participation,” said Malenya.
Most of the insurance companies have attributed the increase of premiums to a surge of claims, some of which are fraudulent.
According to data by IRA, private vehicle insurers reported a combined Ksh2.88 billion loss in the period to June 2021 while commercial vehicle insurers reported a Ksh1.4 billion loss.