By PRAVIN BOWRY
The National Assembly is set to deliberate on new laws relating to compulsory third-party covers for motor vehicles.
The Insurance (Motor Vehicle Third Party Risks) (Amendment) Bill, 2013 has already gone through the first reading. This is the second time the bill will be before parliament after its failed attempt in 2010.
Prior to laws being enacted in Kenya stakeholders generally show apathy and only complain after the law is in force.
It is a little surprising, therefore, that the Commissioner of Insurance, the insurance industry, the Law Society, the Judiciary, the motoring community and organisations such as the Automobile Association have not woken up and publicly raised awareness on the subject.
The envisaged changes in the law are likely to impact on all Kenyans and the consensus is that costs of insurance will rise.
The suggested system of compensation is unfair and complicated for an average Kenyan and open to abuse by medical and legal professions.
The mischief that existed at the passing of the Act to be amended was that a third party injured by a motor vehicle got no compensation for his suffering or if either the owner or the driver of the vehicle happened to be poor.
Mandatory third-party insurance for all motor vehicles remedied this in the late 1930s when the insurance companies by law had to take over liability for injuries to third parties.
It is important to appreciate that the term “third-party” refers to personal injuries to those who are neither drivers nor passengers and covers only third parties involved in road accidents. The insured is the first party, the insurance company the second party and the third party is the person injured.
By law it is mandatory to have third-party insurance for all motor vehicles, which the Act defines as mechanically propelled vehicles intended or adapted for use on roads.
It is proposed that the maximum an insurance company will pay to the claimant under the law is Sh3,000,000 when presently there is no ceiling.
Medical dictionary
The Amendment Bill has only four sections but has 14 pages of “Structured Compensation Liability Schedule” giving various degrees of disablement and compensation “as a percentage of the maximum of three million Kenya shillings”.
To understand and to apprehend and interpret the Schedule lay persons, motorists and even lawyers will have to carry a medical dictionary, such are the intricacies of the Schedule! The percentages payable range from as high as 100 per cent in cases of death and paraplegia and total blindness to as low as 1 per cent in cases of loss of a tooth or finger. No formula is propounded for multiple injuries.
The new law may well bring an end to the inconsistency of the awards issued by the courts. The structured liability schedule that will be introduced if the bill is passed will ensure that in assessing and awarding damages the courts exercise their discretion not only in a judicious manner, but also in accordance to the set amounts in the Schedule.
There are some extremely pertinent and important issues, which need to be debated if meaningful change and sanity is to be brought to accident claims.
In the subordinate courts exercising civil jurisdiction (which presently have jurisdiction of up to Sh7,000,000 about 60 per cent of the cases are what is termed “running down cases”. It would have helped the cause of the judiciary to decongest the courts to have specialised injuries tribunal dealing with motor vehicle (and also industrial and employment related) injury claims.
Procedure for bringing claims, too, needs to be addressed. The present system of filing declaratory suits against recalcitrant insurance companies or company repudiating liability is time consuming and costly. Why should an insurance company not be made a party to the suit to pre-empt a mandatory judgement?
Delay in settling claims arising from road accidents has not been addressed. The new Act is likely to compound delay.
There is need for insurance companies to settle insurance claims within a specified timeframe.
The matters of ambulance chasing, fictitious claims, police corruption in giving suspect accident abstracts and medical practitioners giving falsified medical reports all remain unaddressed.
The ceiling of three million for total disability is also questionable and the consensus is that blanket maximum compensation without regard to the personal circumstances of the claimant is unfair. Should an injured labourer get the same compensation, say, as an injured neurosurgeon or a Court of Appeal judge?
‘Professional’ claimants
What happens when the insurance company fails, should the insured suffer despite having paid the premium? The Commissioner of Insurance must set up an Insurance pool from which claims can be paid in the event of failed insurance companies.
There is also room for roping in fraudulent and ‘professional’ claimants who surface at police stations at every accident.
Yet another issue is whether the Act should apply to the government. Government vehicles remain uninsured and the taxpayer has to pay huge amounts in compensation through the AG’s chambers. Why should the government not pass this liability to the insurance industry?
The consequences and ramifications of the new laws are going to be profound. Opening debate and finding concrete answers is the way forward.
The writer is a lawyer.
