AON faced with Sh200m claim from Loreto school bus accident

AON Minet brokers and Pacis Insurance are locked in a dispute with Loreto Convent Msongari School over the compensation for pupils who were involved in a grisly road accident three years ago.

The school claims that the insurer has declined to pay more than Sh22.5 million out of the total insured sum of Sh200 million, leaving a majority of the students without compensation and exposing the institution to possible legal suits.

The Loreto Convent Msongari bus carrying pupils and four teachers veered off the road and hit a stationary bus at the Subuiga black spot along the Meru Nanyuki Road in July 2011. Two pupils were killed and several others were critically injured.

“The plaintiff (Loreto’s) claim against the defendants jointly and severally is for breach of contract and for a declaration that the defendants are liable to pay for the claims arising from the said accident up to a limit of Sh200 million,” says Loreto in court papers.

The school further wants the court to award damages for breach of contract.

AON acted as the insurance broker, with whom it liaised and received the premium for transmission to Pacis Insurance.

The bus rolled several times before hitting another which was parked by the roadside. The Standard Seven and Eight pupils were travelling to Samburu for an excursion.

The school says in court papers it insured the bus which was involved in the accident for Sh200 million per event during the period of July 2009 to December 2011.

Loreto Convent Msongari claims that it notified both insurance firms of the accident to facilitate settlement of any claims arising.

The school says that Pacis Insurance settled Sh22.5 million and declined further claims alleging that AON had instructed it to reduce policy per event for that period to Sh20 million.

The institution denies ever giving any instructions to AON to reduce the amount covered, arguing that it has always paid the agreed premium corresponding to Sh200 million.

“There are several claims pending for settlement and the plaintiff risks being exposed to directly pay the claims, some of which are substantial, to the plaintiff’s prejudice,” says the school, and wants the firms compelled to settle the pending claims.

Seraphine Oweggi, an official of Blessed Virgin Loreto Sisters says among the pending claims is one in which a student who was involved in the accident is seeking Sh31 million.

“Demand letters in the meantime continued being sent to us and we decided to instruct our advocates now on record, to follow up the matters to ensure we were not caught unaware by any prejudicial development,” says Ms Owegi in the court documents.

The school claims that it realised the policy amount has been reduced in November 2011, after which it wrote to AON demanding rectification.

AON wrote to Pacis Insurance seeking rectification but the latter allegedly refused, saying it can only pay up to Sh20 million.

Loreto says UAP Insurance, AON’s insurer, paid Sh1.1 million to one of the claimants but in May this year informed it that it cannot pay further claims, asking it to seek further compensation from the underwriter at the time of accident, Pacis Insurance.