Lawyers in court over insurance compensation law

Politics and policy

A road accident scene. Lawyers want a law on insurance compensation reviewed. Photo/FILE 

By George Omondi, omondi@ke.nationmedia.com

In Summary

• The challenge opens another front in the battle for compensation where insurers and public service vehicles have been on opposing ends for more than a decade.
• The contested section – introduced by the Insurance (Motor Vehicle Third Party Risk) Amendment Bill 2013 - sets Sh3 million as the maximum amount that a court can award an accident victim.

Lawyers have moved to court seeking to have compensation for accident victims based on the extent of injury as opposed to the limit set by a new law.

The challenge opens another front in the battle for compensation where insurers and public service vehicles have been on opposing ends for more than a decade.

Through Ngatia & Associates, the Law Society of Kenya (LSK) says Section 5(b) of the Motor Vehicle Third Party Risk Act undermines powers of the courts.

“By restricting the sum payable as compensation, the insurers are given unfettered discretion to determine the amount to be paid,” argues lawyer Fred Ngatia.

The contested section – introduced by the Insurance (Motor Vehicle Third Party Risk) Amendment Bill 2013 that President Kenyatta assented to on Christmas eve - sets Sh3 million as the maximum amount that a court can award an accident victim.

The maximum amount remains constant whether the accident involves death, injuries or other forms of damage.

“Curtailing maximum sum payable as compensation in the event of a motor vehicle accident is constitutionally bestowed upon the Judiciary to be decided in an independent judicial forum,” the LSK states in the petition that names the Attorney- General as respondent.

READ: Narok killer bus tests insurance compensation rules

The LSK on one hand, and the Association of Kenya Insurers (AKI) and Matatu Owners Association (MOA) on the other, have been entangled in a long-drawn fight over operation of the third party insurance policy for close to ten years now.

AKI and MOA successfully lobbied Parliament to put a cap on the compensation payable to a victim saying unscrupulous police officers, doctors and lawyers colluded to fleece insurance firms billions each year.

AKI insists that more than 40 per cent of insurance claims in Kenya are fraudulent.

The campaign to put the brakes on accident compensation gained momentum when President Kenyatta was Finance minister with insurers blamed fraud for the collapse of companies covering matatus.

The move by the LSK to seek legal redress comes after several attempts to stop the new laws from taking effect in January hit a dead-end.

The lawyers claim that the new law would stifle competition and deny accident victims the right to choose between various schemes as compensation for various degrees of disablement are predetermined.

Losing the top part of the thumb attracts compensation of Sh150,000 while the whole thumb would be paid Sh750,000 if on the dominant hand or Sh300,000 if not.