Mombasa Cement sues Kenindia over Sh1.6bn factory loss

Mombasa Cement wants Kenindia Insurance to pay it Sh1.6 billion for losses it suffered in 2012 from an accident on its premises.

The cement manufacturer has made the claim in a suit filed at the Nairobi High Court.

It is seeking a total of Sh2.2 billion, inclusive of interest, for losses it incurred between 2011 and 2012 following the collapse of a cement blending silo on its premises.

The cement manufacturer had two policies with Kenindia Insurance: one for the replacement of damaged equipment and another to cushion it in the event that it incurred any losses. The firm wants Kenindia to refund it for the collapsed silo and losses from interrupted business.

Mombasa Cement has alleged in suit papers that Kenindia received Sh1.6 billion from its re-insurers but is yet to remit the amount despite earlier promises to do so.

“The plaintiff is aware that Kenindia in 2012 made cash calls to its various reinsurers on account of this claim and received the same as interim payments but did not remit the monies. Kenindia has decided to enrich itself by holding onto these monies in lieu of Mombasa Cement,” the firm claims.

Following the collapse of the silo, Mombasa Cement through its insurance brokers filed a Sh1.6 billion claim with Kenindia, which it insists was payable as per the policy agreement.

The insurance company is yet to file its response but has raised the clarifications it wants the court to make regarding the claim. Kenindia has, however, questioned whether the blending silo was part of the equipment provided for in the policy’s terms and conditions.

“Did the blending silo Mombasa Cement has claimed for fit the description it purported to insure? Did the policy have any exclusions and is the plaintiff guilty of breaching any of the exclusions provided for?” Kenindia has asked the court.

Mombasa Cement holds that the silo was covered and that the insurance company has opted not to pay what it had earlier pledged to remit. The firm says that the bending silo was an integral part of its operations hence it was among the equipment insured.

“Mombasa Cement has since the accident obtained a valuation of its total losses which is Sh1.6 billion. Based on the two policies issued by Kenindia, the blending silo was fully covered and it was entitled to be indemnified for the loss incurred following its collapse,” the firm says.

It claims that it made additional premium payments totalling Sh12 million after the accident, which it thought was a surety that its claim would be made good.

Kenindia’s assessment of the claim had initially revealed that it was liable for Sh727 million, but it only remitted Sh393 million to Mombasa Cement in September 2013.

Mombasa Cement lodged a complaint with the Insurance Regulatory Authority in 2013, which ruled that Kenindia ought to honour the cement manufacturer’s claim. It reckons that Kenindia has refused to abide by the regulator’s decision.

“Despite the IRA’s directions given on May 30, 2014 and notice of intention to sue, Kenindia has refused to make good the plaintiff’s claim,” said Hasmukh Patel, one of Mombasa Cement’s directors.