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Regulator recovers over Sh38m from rogue insurers

BUSINESS
By Moses Omusolo | Jun 23rd 2022 | 2 min read
By Moses Omusolo | June 23rd 2022
BUSINESS
Competition Authority of Kenya Director-GeneralFrancis Wang'ombe Kariuki. [Boniface Okendo, Standard]

The Competition Authority of Kenya (CAK) has helped recover over Sh38 million in delayed payments from several local insurers. 

This is as CAK data on the abuse of buyer power by sector in the financial year 2020/2021 showed that the insurance industry leads by 44 per cent followed by architectural services at 34 per cent.

The Authority said the investigations targeted up to 18 major insurance companies that had unjustifiably reneged on honouring payments to some 20 motor vehicle repairers and five motor vehicle assessors from across the country in some instances for services rendered and completed five years ago.

“These overdue invoices forced the SMEs to take up expensive loans, downsize, or increase the cost of ­­­ their services to meet their business overheads including paying salaries. Others were forced to shut down,” said the authority in a statement.

CAK disclosed that the complainants including 16 members of the Kenya Motor Vehicle Repairers Association had suffered delayed payment injustice amounting to Sh5.95 million “without justifiable reasons and in breach of the agreed terms of payment, unilaterally terminating contracts without prior notice, demanding for unfavourable terms detrimental to the garages and transfer of commercial risk.”

CAK said the findings in effect pushed Kenya Orient Insurance to complete payment of up to Sh1.3 million and the matter was closed.

“Invesco Assurance Ltd and Trident Insurance have progressively made payments of Sh2.4 and Sh2.01 million respectively. However, some amounts were still outstanding at the end of the reporting period,” said the regulator.

In the year under review, CAK investigated at least 50 cases of abuse of buyer power.

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