The government has announced plans to intensify a crackdown on rogue insurance companies accused of exploiting public service vehicle (PSV) operators by failing to remit premiums or settle claims.
The Insurance Regulatory Authority (IRA) confirmed the move as part of efforts to restore order and accountability in the insurance sector while appearing before the National Assembly Public Petitions Committee.
IRA Chief Executive Officer Godfrey Kiptum said the Authority had identified several non-compliant insurers that would soon face regulatory action. The developments followed a public petition filed by Machakos MP Caleb Mule, who accused the regulator of failing to protect PSV operators from exploitative insurance providers.
The meeting, chaired by Turbo MP Janet Sitienei, sought to understand the extent of non-compliance in the PSV insurance sector and the measures the IRA was taking to protect vehicle owners and passengers.
Sitienei questioned why insurers were still allowed to collect premiums from matatu owners despite consistent failure to pay valid claims.
Insurance Sector Operations
In his response, Kiptum revealed that only three companies are currently licensed to transact PSV insurance in Kenya, noting that the sector has long been considered high-risk, making it difficult for insurers to offer sustainable premium rates.
Kiptum explained that PSV insurance primarily covers third-party liabilities such as death, permanent disability, and medical expenses resulting from road accidents. However, he clarified that the cover does not extend to the vehicle involved in the accident or its owner.
PSV Operators Complaints
The IRA boss admitted that the Authority had received numerous complaints from PSV operators about delayed or denied claims, with the regulator assuring lawmakers that measures had been put in place to enhance compliance and governance within insurance companies handling PSV coverage.
Among the administrative interventions the regulator promised to take were the placement of errant insurers under statutory management and the appointment of board directors to ensure adherence to the Insurance Act.
He further stated that the Authority, in collaboration with the Insurance Fraud Investigations Unit and the Office of the Director of Public Prosecutions, had initiated prosecutions against directors and officers found culpable of negligence or fraud.
Those convicted risk fines of up to Ksh5 million or imprisonment for up to two years.
Meanwhile, during the same session, the Federation of Public Transport Sector (FPTS), represented by Chairperson Kushian Muchiri, called for reforms in the handling of personal injury claims, proposing the integration of the Small Claims Court framework to address road traffic accident cases more efficiently.
Muchiri raised concerns that the current legal procedures were inadequate, often leading to delayed justice for victims and financial uncertainty for insurers.
He pointed out that the 30-day pre-litigation notice required under the Insurance (Motor Vehicle Third Party Risks) Act was rarely adhered to, undermining insurers’ ability to conduct timely investigations.
