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Reprieve for Migori County in Sh63m insurance battle with Amaco

BUSINESS NEWS
By Eric Abuga | June 8th 2020

Africa Merchant Assurance Company Limited (AMACO) has lost a court battle to recover more than Sh 60 million form Migori County Government for insurance cover provision.

In a ruling by Migori Judge Justice Anthony Charo Mrima, the Plaintiff, as a supplier of services, was called upon under Section 27 of the 2005 Act and Section 72 of the 2015 Act to fully comply with the provisions of the respective procurement Acts and Regulations.

Justice Mrima, in his judgment dated May 28, 2020, said that the Plaintiff and the Defendant were alive that their engagements outside the law were illegal stating that the insurance company could only receive the remaining amount of Sh12 million which was part of the duly signed Sh19 million contract.

In the matter, it was admitted that the Plaintiff did not have a Letter of Award, a contract, or a Local Service Order for the financial year 2016-2017.

The Plaintiff’s suit was filed sometimes in 2018. The suit sought the recovery of Sh45,053,478 with an interest of Sh18,922,468. The Plaintiff also sought costs.

The Plaintiff insured Migori County Government motor vehicles for the financial year 2015-2016. The defendant’s motor vehicles were also insured by AMACO for the financial year 2016-2017 as well as other assets of the Defendant.

The insurance company while arguing the petition, stated that the contract listed specific motor vehicles that were to be covered. The County Government made a payment of Sh 7 million in September 2015 towards the settlement of the contract sum.

The County Government which was being represented in Court by Sagana, Biriq, and Company Advocates argued that the Plaintiff failed to provide the services following the contract. “In breach of the contract and the law, the Plaintiff unilaterally and arbitrarily decided to add other policies such as life and general insurance for some of the Defendant’s officers which policies were outside of the contract.”

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A witness, Anunda Mandere who was the Manager of the Plaintiff’s Migori Branch testified that the insurance covers which the Plaintiff provided according to the contract were both commercial and private. All insurance covers were in the category of ‘comprehensive insurance covers’.

Anunda testified that during the financial year 2015-2016 the County Government purchased some assets and requested some additional insurance covers. “We extended covers to the Defendant which were not in the contract. The extension was based on the Defendant’s undertaking that the contract will be amended to take into account the additional covers.”

The Plaintiff continued to provide insurance services for the financial year 2016-2017. According to Anunda that was on the understanding that alike contract for the year 2016-2017 was to be executed by the parties.

At the end of the financial years 2015-2016 and 2016-2017 the Plaintiff had provided insurance covers to the Defendant to the tune of Sh45 million.

Migori County Government Secretary Christopher Rusanna testified that they neither amended the contract nor signed any contract with the Plaintiff for provision of insurance services for the financial year 2016-2017.
Surprisingly, the Defendant was at a loss as to how the Plaintiff would render services in a case where there was no bidding process at all for the 2016-2017 financial year.
 The applicant had in 2015 successfully participated in a procurement process with the County Government
The process was in respect of a tender for the Provision of General Insurance Services for 48No. Migori County Government Vehicles for the Year 2015-2016
Contract No. MC/SCMS/06/3/VOL.IV (802) dated 13/05/2015 was eventually signed between the parties herein at the contract price of Sh 19,919,850

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