Appellate court hands IRA reprieve in claims lawsuit

Insurance Regulatory Authority chairman Mwambu Mabonga at the authority’s Upper Hill office on February 16, 2023. PHOTO | DIANA NGILA | NMG

The Court of Appeal has suspended a High Court decision forcing the Insurance Regulatory Authority (IRA) to settle claims for policyholders on behalf of insurers that are unable to pay.

A bench of three judges ruled that the industry regulator had raised an arguable case as to whether it has failed in its functions by failing to rein in unscrupulous underwriters.

In a judgment last June, the High Court said where the State fails to protect the insured against unscrupulous insurers, it is only just for it to take responsibility over the failure to regulate the players in the industry.

The IRA moved to the appellate court arguing that it had been slapped with at least six cases by policyholders following the judgment, seeking payment.

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“Looking at the facts in this application in totality, this is a proper case for the maintenance of the status quo pending the hearing and determination of the appeal,” said Justices Hannah Okwengu, John Mativo and Mwaniki Gachoka.

The judges directed the IRA to file the case within 30 days from the date of judgment and the matter be heard on priority.

Justice George Odunga (now Court of Appeal judge) had directed the IRA and the government to settle the claims for Peter Mwau Muinde, who was facing auction because Invesco Assurance Company Ltd, was unable to settle claims from accident victims.

Mr Mwau had two vehicles insured by Invesco.

The IRA, which is funded from the public purse, said the decision was likely to paralyse its functions should it shoulder private insurance (motor vehicle third party) liabilities.

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The regulator also faulted the decision arguing that it was framed as a constitutional matter yet it was a commercial and contractual dispute between the matatu owner and the underwriter.

Invesco on its part said it was paying the claims in installments after coming out of statutory management.

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