Mechanics under the Motor Vehicle Repairers and Motor Vehicle Assessors have scored big after 18 insurance companies were found culpable of failing to honour claims.
In a statement dated Tuesday, June 21, the Competition Authority of Kenya found that the 18 insurance companies failed to honour claims of 20 motor vehicle repairers and five vehicle assessors in the country.
According to the government agency, some cases of unpaid insurance claims have stalled for over five years forcing most of the garages that fall under Small and Medium Enterprises (SMEs) to halt their operations.
The intervention by the Competition Authority will see the affected traders access Ksh38 million secured from the investigated insurers.
Other than the monetary compensation, the Authority has also salvaged over 1,000 jobs for employees who were on the brink of being rendered redundant by the motor repairers and assessors.
"Such actions place thousands of livelihoods at risk since their sources of income come under unbearable and unjustifiable financial strain. Big businesses are, therefore, reminded of their obligation to abide by the Competition Act and honor their supply agreements," a statement by Competition Authority read in part.
The Authority also reached out to small businesses in the insurance and retail sectors to keep records of all the written contracts between parties to avoid facing challenges emanating from policy claims.
The recovery of the money is in line with the powers bestowed on the Competition Authority in enforcing abuse of buyer power provisions in the insurance industry.
While appreciating the efforts by the government agency, Harrison Ikunda, the Chief Executive Officer of the Kenya Motor Repairers Association, detailed that most of their members were greatly affected by the row with the insurers who had refused to release compensation remittance.
"We approached the Authority when our members complained about payment delays by different insurance companies. The funds released to us has facilitated the survival and growth of our businesses," Ikunda remarked.
This comes just days after the court ruled that the government will now be forced to compensate motorists when insurance companies collapse.
The High Court, while defending the decision, noted that the government should regulate the sector to weed out the rogue insurers.
"Where the state fails to protect the insured against unscrupulous insurers yet ensure that the insured take insurance covers at their costs, it is only just that the state takes responsibility for its failure to regulate the players in the industry, otherwise it would be assisting those insurers who use statutes as instruments of fraud," Justice George Odunga ruled.
