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Uproar over new Kenya insurance rates

NAIROBI, Kenya Mar 2- The Motorist Association of Kenya (MAK) has threatened to go to court in the next one week over a decision to increase insurance premiums by nearly 50 percent.

The Association’s Chairman Peter Murima told Capital Business that they have petitioned Prime Minister Raila Odinga and the Insurance Regulatory Authority (IRA) over the issue and would seek legal redress if they did not get a response within seven days.

“We have consulted our lawyer who has advised us to first explore all the avenues available to us and if there is no response then we go to court and apply that it overturns this unpopular move,” he said adding that they were also going to collect signatures from motorists and other supporters.

AKI started implementing the policy changes on March 1 which will see drivers pay a premium of 7.5 percent of the value of the sum insured up from 4.5 percent.

This followed a shift in the underwriting system from Flat Rate Underwriting to Non-claim Discount Underwriting that is designed to penalise careless drivers while awarding the cautious ones.

While pointing out that they were not opposed to a reasonable upward adjustment, Mr Murima argued that the new rate and the reasons offered by AKI were unjustified and unreasonable.

“Some of the reasons that are being fronted are that they want to forestall accidents. But accidents are bound to happen and that’s why people insure their vehicles,” he stressed.

“The excuse of rewarding non-claim clients is not justified. If it was, why not give the discounts upfront?” he posed.

He said they were particularly irked by the decision because they were not consulted before the guidelines were set and introduced.  He added that 75 percent of vehicle owners in the country would not be able to affordable the charges.

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“We feel that the IRA should have done consultations first to gauge and have the view point of vehicle owners who are the chief stakeholders in this industry. We are consumers and they should regard us with some decorum,” he said.

While taken to task over why they did not raise the issue before the enforcement date, Mr Murima defended Association saying they had written to the regulator (IRA) requesting it to intervene and defer the implementation date until discussions were held. This did not however happen.

“We had given the respective Authority the benefit of doubt and thought that they would address the issue, but we realised that this was not forthcoming when it was already too late,” he said.

Motorists he said were reading sinister motive in the decision by the Association of Kenya Insurers to raise the premiums saying it was to generate profits for insurance companies.

Mr Murima demanded that the industry should first address the issue of fraud which has resulted in the poor performance in the motor business and spelt doom for many general insurance firms.

They should first address the issue of fictitious claims and complicity among the officials in the industry such as the law enforcers, doctors and agents who connive to defraud the insurance firms, he demanded.

“We don’t want insurance companies to transfer their problems to us where they would want to make profits at our expense while the actual problem is the management of their companies,” he maintained.

He further proposed that the money collected from motor insurance be converted into a trust fund to enhance transparency and accountability in insurance firms.

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