The High Court has ordered the Insurance Regulatory Authority (IRA) to compensate a motor vehicle owner for cases filed by accident victims after faulting the regulator for failing to ensure insurers settle claims as required by law.
Justice George Odunga ruled that it serves no purpose for the government to compel people to take out policy covers when it does not ensure that people benefit from the services they are paying for.
“The people have delegated their authority to the State in the expectation that the State will undertake its mandate as expected by the people,” the judge said in a ruling that is set to excite car owners.
Justice Odunga made the decision in a case filed by Peter Muinde, a retired police officer who owns several matatus. The retired officer had complained that auctioneers had on several occasions attached his properties over claims filed by accident victims, yet he has been paying insurance premiums to Invesco Assurance Company Ltd.
Mr Muinde accused the underwriter of failing to meet its end of the bargain by failing to settle various claims.
He argued that the underwriter did not provide quality services as required and despite making some payments, it has been trickling at unacceptable rates.
The matatu owner said the conduct of the insurance company amounts to deceit and obtaining money by false pretence.
He said the failure on the part of the regulator has seen him lose his property and accident victims unable to get compensation for injuries and that the public confidence in the insurance sector as a whole has been eroded since one can never be sure whether the claims will be paid.
Justice Odunga agreed, saying when the government body fails to protect the insured against unscrupulous insurers yet ensures that the insured take out insurance covers at their costs, it is only just that it takes responsibility for its failure to regulate the players in the industry.
The judge said the failure to do so would be assisting insurers who use statutes as instruments for fraud.
“Insurance companies do not just collapse. Before they do so, there are usually tell-tale signs or indicators which can easily be discerned by hawk-eyed officers of the 1st Respondent if keen enough instead of waiting until the insurer cannot meet its statutory obligations before moving in to perform the last rights,” the judge pointed out.
Justice Odunga said it is expected that the government would take a keen interest in how the insurance industry is being run to give meaning to the compulsory requirement for those to take their vehicles to the road to take out appropriate covers.
“When motor vehicle owners are compelled to take out insurance policy covers, they have a legitimate expectation that the State will efficiently regulate that sector so that in the event that they are called upon to compensate those who suffer injuries that are covered by the policy, they will be protected from having to directly compensate the injured,” the judge said.