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Insurers spared from rushed rulings in accident claims
High Court ruling removes injury-related motor accident claims from the small court’s fast-tracked system, which hears matters valued at up to Sh1 million.
Insurers have received a reprieve after the High Court ruled that the Small Claims Court cannot hear injury compensation claims arising from road traffic accidents, ending a system they argued forced payouts within 60 days and left them exposed to fictitious claims.
The ruling effectively removes injury-related motor accident claims from the court’s fast-tracked system, which hears matters valued at up to Sh1 million.
Insurance companies, through the Association of Kenya Insurers (AKI), had since 2024 pushed back against the inclusion of injury and fatal accident claims in the Small Claims Court, arguing that the simplified procedures and strict 60-day determination timeline denied them the opportunity for proper claims assessment.
Their reprieve came through a case filed by James Muriithi Gathaiya, who petitioned the court to strip the Small Claims Court of the power to hear and determine claims by victims of road accidents.
Mr Gathaiya was joined by 176 interested parties who were facing claims before the court’s Eldoret branch.
The 176 challenged the jurisdiction of the court to hear and determine personal injury claims arising from road traffic accidents (RTA), prompting Chief Justice Martha Koome to consolidate the matters and empanel a three-judge bench to hear the case. The Attorney General, the National Assembly and the registrar of the Small Claims Court were named as respondents.
The High Court bench said the jurisdiction of the Small Claims Court was intended to create a “real people’s court” that provides informal and uncomplicated proceedings for claims valued at up to Sh1 million, to mitigate case backlogs in a litigious society like Kenya, where “every dispute is a threat to another ‘see you in court.’”
“The jurisdiction of personal injury claims, which by dint of insurance contracts on policy secured between the insurer and the insured, makes them complex, requires the entire regulatory framework and applicable statutes such as Cap 405 of the Laws of Kenya not to be rendered moribund. A claim for compensation for personal injuries in RTA cannot qualify as a small and simple claim,” the bench said in a judgment delivered last Thursday.
The judges said the Small Claims Court was primarily meant to handle civil claims or actions for the payment of money capped below Sh1 million and that if it had been Parliament’s intention to limit insurers’ rights to assess claims, “nothing would have been easier than to state so.”
“We find and hold that claims for compensation for injuries arising out of road traffic accidents were not contemplated to be part of the matters to be entertained by the Small Claims Court,” the bench said.
Fictitious claims
The decision is a reprieve for insurers, who had told the Chief Justice that they were paying numerous fictitious claims due to rushed awards in a court that is not wholly bound by strict rules of evidence under the Evidence Act and Article 50 of the Constitution.
AKI chief executive Tom Gichuhi had written to Ms Koome, explaining that 60 days was insufficient for claimants to provide evidence such as medical reports containing initial treatment notes, P3 forms, X-ray notes, discharge summaries and medico-legal reports. Insurers rely on such documents to determine payable amounts or whether to refer claimants for re-examination.
The bench agreed with AKI, noting that Sections 3A and 3B of the Insurance (Motor Vehicles Third Party Risks) Act, 2013 permit insurers to refer claimants for a second medical report and allow 30 days for verification of information presented.
“From the foregoing, subjecting claims for personal injury in RTA to the Small Claims Court would limit the rights of the insurers…” the bench said.
The judges added that it would amount to double standards and discrimination to treat claimants with personal injury claims below Sh1 million differently from those with similar claims valued above that threshold.
The bench directed that all personal injury cases arising from road traffic accidents and still pending before the Small Claims Court be transferred to the magistrates’ courts.
“A declaration hereby issues that all cases now pending before the Small Claims Court for claims for personal injuries arising out of road traffic accidents be transferred and are deemed transferred to the Magistrates’ Court with jurisdiction,” the bench directed.
The Insurance Act is silent on the duration insurers may take to investigate claims but requires settlement within 90 days once an agreement is reached with the insured. The Act allows an insurer that is unable to pay within the 90-day period to apply to the regulator for an extension of up to 30 days.
