A group of 15 policyholders has sued the Insurance Regulatory Authority (IRA) seeking restoration of their digital insurance certificates, which were cancelled last month after the regulator placed three underwriters under statutory management.
In a class-action suit, the petitioners allege they have been facing arrest and impounding of their motor vehicles 'for driving without insurance', and being forced to double payment for a single risk, over a move that was not of their own making.
In a notice on March 10, the IRA placed Trident Insurance Company, KUSCCO Mutual Assurance, and Corporate Insurance Company Ltd under statutory management.
Following the move, IRA used the Digital motor vehicle insurance certificate (DMVIC) system to remotely void active insurance holders with immediate effect.
The petition said this was done without any financial consideration or advice to policy holders to give them time to seek alternative policy.
They argue that use of a ‘kill-switch’ to cancel policies without notice violates the mandatory requirement for prior and adequate notice under section 4 of the Fair Administrative Action Act.
“That we are being victimised for a situation beyond our control and knowledge, forced into double payment for a single risk,” the petition stated.
Another petitioner had earlier sued IRA and sought court orders to compel insurance companies, including those currently facing liquidation, to settle payments awarded to third-party claimants.
Joseph Waihuro Mwaura argued in his case that despite the clear provisions of the law, several insurers under liquidation have failed to indemnify policyholders by settling decretal sums and associated costs owed to beneficiaries of court awards.
He also wants the IRA and the Attorney General to establish and enforce effective mechanisms for ensuring compliance with Section 10 (1) of the Insurance (Motor Vehicle Third Party Risks) Act, including securing settlement of third-party decrees by insurers under liquidation or statutory management.
In the current case, the petitioners said the move was made without prior notice or a transition period, a move that affected more than two million members of the public insured by the three affected insurance companies.
The petition added that the move constitutes administrative lawlessness by using digital tools to bypass the constitutional safeguards of due process.
They want the High Court to issue an order compelling the IRA to restore the ‘valid’ status of their certificates on the DMVIC portal, pending the hearing and determination of the application.
Motorists insured by companies recently placed under statutory management say they are being flagged, fined or detained despite holding policies they believe are still valid.
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They are also seeking an order that all existing policies held by the insured be deemed as valid for all intents and purposes, and any claim arising from the said policies be deemed as payable by the relevant insurer and or statutory manager in fulfilment of the obligations of the insurer under insurance law.
The petition stated that the cancellation amounts to an arbitrary deprivation of property (premiums paid) contrary to Article 40, effectively taxing citizens twice for the same risk.
The petition further says the police have been arresting motorists for a ‘regulatory void’ they did not create, violating the right to liberty under Article 29 and the presumption of innocence under Article 50.
“Unless the court intervenes, the applicants face immediate financial ruin and loss of liberty through ‘unconscious criminality’ triggered by backdated digital records.
They submitted that the matter transcends the individual petitioners, affecting thousands of motorists and the stability of the insurance sector’s consumer protection framework.
Mr Antony James Kiongo said he was pulled over by the police officers on March 13, and was informed that his insurance had been cancelled on the digital system. This was despite his physical certificate being valid. Mr Kiongo was a policyholder with Trident Insurance.
It was then that he learnt of the notice putting three insurance companies under statutory management.
“No sufficient notice was given to any of the petitioners and other members of the public who were likely to be affected by the actions of the administrator as required under law,” he said.
