Plans to raise insurance premiums for motor vehicle insurance by up to 50 percent have been suspended by the High Court of Kenya, pending the determination of a case filed by a lobby group.
In his ruling, Justice James Makau noted that the petitioner- Kenya Human Rights Commission stood a fighting chance owing to issues raised in their petition, adding that there was a likelihood of success in favour of the petitioner.
“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.
KHRC moved to court last week accusing the Insurance Regulatory Authority (IRA) of failing to protect the public and policyholders from the 50 percent increase in premiums.
On behalf of KHRC, Lawyer Kelly Malenya told the court that the increase of up to 50 percent of premiums for motor-vehicle comprehensive cover from January, a move that is illegal because there was no public participation.
The lobby group had submitted that considering the mandatory nature of motor-vehicle insurance, the planned increase is discriminatory, unjustified and illegal.
“The said actions also amount to a violation of consumer rights and are punitive, insensitive and oppressive,” Malenya said.
Most of the insurance companies have attributed the increase of premiums to a surge of claims, some of which are fraudulent.
But the commission said this is not a reason to increase premiums given the law provides safeguards that allow insurance companies to repudiate claims that are not genuine.
Justice Makau said failing to suspend the planned increase was likely to prejudice the public, whereas the underwriters would not suffer if the order is granted. He also joined the Consumers Federation of Kenya (Cofek) as an interested party in the case.
Malenya further said some of the underwriters have announced that they will not offer a comprehensive insurance cover for motor vehicles that are older than 12 years or with a value of less than Sh600,000.
Justice Makau also issued an order suspending the decision by insurance firms not offering comprehensive insurance cover to certain vehicle classes. The case will be mentioned on February 14.
