AIG on collision path with lobby

June 17, 2009

, NAIROBI, Kenya, Jun 17 – A legal battle between AIG Kenya and the Association of Kenya Insurers (AKI) is in the offing after the insurance company contested a decision to suspend it for contravening an agreement.

The row stems from the decision by AIG Kenya to continue providing the Employers Liability Insurance, which covers employers against legal suits by employees despite a resolution by AKI to the contrary.

“AIG Kenya resolved not to comply with AKI’s Resolution No. 18/2009  as it was a violation of the law  specifically Section  4, 6, and 7 of the Restrictive Trade Practices, Monopolies and Price control Act, Cap 504 of the laws of Kenya,” explained AIG Kenya Managing Director Japh Olende on Wednesday.

He further added that AKI’s decision would leave thousands of the insuring public overly exposed.

While defending his company’s move, the MD said that since the government had appealed against the ruling deleting nine sections of the Work Injury Benefits Act, it was important to give it (government) time to go through the legal process.

“During this time, the insuring public became exposed to legal suits by employees, hence our position to provide Employers liability insurance,” Mr Olende further added in a statement sent to newsrooms.

Although AKI alleges that it sent letters urging firms not to offer this cover, the MD claimed that a notice of the Association’s members’ meeting held on March 26 to discuss the way forward on the Act and did not indicate the intention to stop members from providing the Employers Liability Insurance following the nullification of the contentious sections of the act.

Mr Olende further took issue with AKI over its decision to ‘single out’ AIG claiming that many insurance companies were still providing the cover even after the resolution was passed.

He said that AKI has no authority to direct insurance companies not to write any insurance products as it is only a trade association and not the Insurance industry regulator.

“The regulator is the Insurance Regulatory Authority (IRA), which has always licensed AIG Kenya Insurance Co. Ltd. AIG has licence to operate for the year 2009. This action by AKI amounts to cartel-like behavior against the insuring public,” fumed Mr Olende.

And in defiance of AKI’s directive, AIG Kenya maintained it is in business as usual and would continue to provide all line of insurance it is licensed to write.


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