PSV insurer bid to block Sh600m claims flops

An accident scene involving a Public Service Vehicle. Between 2010 and 2013, the firm had flagged at least 700 fraudulent claims. [Mose Sammy, Standard]

Public Service Vehicles (PSV) insurer Invesco Insurance Ltd risks collapse after the High Court yesterday declined to halt payment of Sh600 million worth of claims, half of which are said to be fraudulent.

The insurer had moved to court claiming it had flagged nearly 2,000 fraudulent claims out of 6,000 cases, which would cost it Sh300 million.

But Justice James Makau declined to issue orders dismissing the claims, saying the firm would have to seek a review of individual cases from the respective courts that had awarded the claims.

According to the judge, some of the accident awards were issued by magistrate courts, while others were issued by the appeals court.

The insurer, which is 80 per cent owned by the Matatu Owners Association, said the number of claims had increased astronomically in the last five years.

Invesco claimed cartels had infiltrated the PSV insurance industry, rendering its business and that of other operators untenable.

“As a consequence thereof, the petitioner has suffered and continues to suffer severe financial haemorrhage and rip-off by cartels to the peril and detriment of bona fide claimants and the general insurance public,” said the insurer through its lawyers from Gichuki King’ara Advocates.

The lawyers told the court that between 2010 and 2013, the firm had flagged at least 700 fraudulent claims.

Some of the firms that have been forced to close shop due unsustainable claims are Kenya National Assurance Company, Lakestar Insurance, Stallion Insurance, Standard Assurance and Concord Assurance. Invesco traces its woes back to 2014 when its top management exited without the knowledge of its shareholders.

“As a consequence of the above, the first petitioner (Invesco) is inundated with numerous accelerated and inflated judgement, which are based on unverified documents,” the court heard.

Invesco claimed its investigations had established that vehicles affixed forged insurance certificates, which courts relied on to award accident damages.

It identified the Coast, Nyanza, Eastern and Rift Valley regions as the major hot spots of insurance fraud.

In the Coast region, for instance, a total 747 cases of fraud were flagged with claims of Sh95 million, while the Eastern region had 603 cases worth Sh38.3 million. Rift Valley had 458 claims worth Sh43.6 million.

In Nyanza there were 415 fraudulent claims worth Sh50.8 million, while Central had 531 claims worth Sh27 million.

The court heard that investigations for Nairobi were ongoing, and so far 400 cases had been flagged as fraudulent.

Attorney General Kihara Kariuki and Invesco’s receiver managers had opposed the case, arguing that the court had no powers to intervene, as the cases were heavily commercial in nature.