The Court of Appeal has dismissed an application lodged by the Insurance Regulatory Authority (IRA) seeking to overturn a high court decision that stopped it from controlling charges imposed by insurance companies on motorists.
In its ruling, the Appellate Court noted that the guidelines issued to insurance companies by the regulator were irrational, unreasonable and disproportionate.
While dispensing the judgement, the court directed the parties involved in the case to bear their costs both in the High Court and at the Court of Appeal.
The latest ruling by the Court of Appeal upheld a judgment issued by the High Court in 2017 that stopped the IRA from setting prices on behalf of commercial insurance companies which were to be charged by the firms to motorists applying for any form of insurance coverage.
"Decision makers must understand the law regulates them. If they fail to follow the law properly, their decision, action, or failure to act will be illegal. I find that IRA acted outside its powers as stipulated under the law," ruled High Court Judge John Mativo.
The High Court ruling followed an application filed by the Commission of Administrative Justice (Ombudsman) accusing the government of making the pricing of insurance motor cover a monopoly and converting the industry into a cartel without any supporting legislation.
In its argument, the commission stated that the guidelines contravene the economic, social and consumer rights of Kenyans provided for under Articles 43 and 46 of the constitution and the right to fair administrative action.
While defending its move, the Insurance Regulatory Authority told the court that its actions were meant to shield insurance firms from losses and at the same time give a standard to all services.
The government agency submitted that the reason for the guidelines was to ensure motor vehicle insurance claims were paid and motor insurance companies stayed afloat in the best interest of the public.
IRA further argued that sections 3A (a), (b), (d) and (g) of the Insurance Act mandated it to control, formulate, regulate and enforce standards for the conduct of insurance and reinsurance business in Kenya as well as issue supervisory guidelines.
"IRA, therefore, met the proportionality and reasonableness test in issuing the guidelines, and which were for a legitimate purpose in fulfilment of its mandate under section 3A of the Insurance Act," the Insurance regulator argued.
Following the High Court ruling, IRA and the office of the Attorney General lodged an instant appeal, in which they sought the court to set aside the ruling that stopped it from implementing the regulations drafted in 2009.
