Eyes on regulator as insurers throw select car model owners under the bus
Passengers in an overloaded Toyota Probox operating on the Rongo-Homa Bay highway.
In the past month, two insurance firms have issued public circulars warning that they would withhold comprehensive cover for a select model of vehicles amid claims of “misuse” by owners.
In the first case, GA Insurance informed its clients of its plans to stop issuing comprehensive policies for Toyota Probox, Succeed, Sienta, Passo, and Porte, claiming that they had created problems during the settling of claims due to their misuse.
“After a comprehensive review of our motor private book and the loss trends, we wish to communicate that there are vehicles whose usage has been misemployed and, therefore, have proven to be a challenge when settling claims,” GA Insurance said in a letter to its business partners dated October 21, 2022.
The insurer, with a market share of 8.7 per cent for the general insurance business in the country, also announced that it would no longer issue comprehensive covers for all Suzuki models valued below Sh1 million.
Most of the vehicles that the insurer wants to debar from its comprehensive cover have been largely used for commercial purposes in Kenya, with Toyota Probox popular for public transport business, transportation of goods such as Muguka, a khat (miraa) variant, and other agricultural produce.
“We will, therefore, not underwrite the models on a comprehensive basis to ensure the smooth running of the business and maintain an excellent client experience,” the letter by GA Insurance’s head of Bancassurance, Kenneth Kagira said.
And in the wake of the GA Insurance’s communication, another insurer, APA said it had blacklisted 28 models of Toyota, Honda, Maruti, Mazda, Nissan, and Suzuki cars, barring their owners from accessing comprehensive covers for what it says is a misuse of the vehicles.
Those banned under the insurer’s Bima Bamba motor cover include popular Toyota models Wish, Vitz, Probox, and Fielder, Honda (Stream, Fit, Airwave), Suzuki (Swift), Mazda (Demio, Axela) and Nissan (Tiida, Vanette, Wingroad)).
Bima Bamba is a comprehensive motor insurance cover that allows for payment of premiums to be made in instalments.
APA claimed it opted for the move due to the frequent use of the cars in ferrying passengers while they are registered as private vehicles, according to Ashok Shah, the chief executive of APA’s parent firm Apollo Investments Limited.
“Like many other underwriters, we do not insure vehicles that can be used to carry passengers. These have to be insured as taxis/buses,” Mr Shah was quoted by Business Daily as having said. “The models are blacklisted due to the wrong usage of the subject vehicles.”
Unfairly victimised
The announcements by the two insurers caused an instant public storm amid concern that thousands of car owners could be unfairly victimised.
“It is unfair to punish everyone for the purported mistakes of a few people. Owning a specific model of car doesn’t automatically make me a rogue user as portrayed by the insurance firms. Every client must be treated on an individual basis,” Peter Ngahu, a used-car dealer on Nairobi’s Ngong’ Road told Smart Business.
“The position taken by the insurer is illegal and can be challenged in court. Insurance contracts are signed with individual car owners and not car models. It is criminal to attack car brands that have nothing to do with the purported rogue behaviour of some car owners or users,” he added.
The association of Insurance Brokers of Kenya through its chairman Anthony Mwangi also criticised the decision by the insurance firms saying it was a violation of rights and threatened businesses dealing in the blacklisted models.
APA Insurance has seemingly since toned down on its threats amid growing protests from the public.
“In October 2022, APA Insurance launched the APA hAPPiness App and APA Insurance Customer Web Portal for more efficiency and convenience. Upon launch, we restricted motor vehicles from the retail sector only for drivers who use their cars for business or commercial purposes. The list of vehicle models which are prone to misuse differs from region to region,” Vinod Bharata, the chief executive officer of APA said in a notice dated November 10, 2022.
“The hAPPiness App and the customer web portal do not always differentiate the regions. Therefore, to enable our existing clients and business partners to insure their vehicles, we request you to use our normal back office channels and ensure that you complete a declaration of use form,” he added in the notice labelled “Clarification-Excluded Vehicles on the APA hAPPiness App.
As the storm rages, eyes will be on the Insurance Regulatory Authority (IRA) for directions amid fears that the development may trigger court battles and impact sales of the blacklisted models.
“The IRA must come out and call the insurers to order. There is a clear template for assessing an insurance cover and deciding on the scope, for instance, if one is viewed as a high risk then that could be mitigated through the allocation of higher premiums. You don’t resort to blacklisting everyone because contracts are signed by individuals whose vehicles are assessed individually,” Mr Ngahu added.
