Ambulance chasing cartels must not prevent Uhuru’s PSV insurance reforms

Public Watchdog

Yes, it is time for the Treasury to rein in rogue lawyers commonly termed as ambulance chasers. Why? Instead of providing professional services to victims of accidents, a category of lawyers fleeces them, mainly in the public service vehicles (PSV) sub-sector.

Today, Public Watchdog returns to the insurance sector following resolute action by the Deputy Prime Minister and Minister for Finance Uhuru Kenyatta to restore sanity into the sector. This is in respect to proposals to check a rip-off by ambulance chasers in the transport sector involving some insurance companies, lawyers and auctioneers and even magistrates.

We have in the recent past highlighted the pervasiveness of these rackets, leaving the Insurance Regulatory Authority (IRA) weak-kneed, hopelessly blinkered and willfully incompetent in dealing with the sector’s challenges.

The insurance industry has welcomed proposals in the Budget policy presentations with respect to amendments governing Motor Vehicles Third Party Risks insurances. Uhuru also made a significant step by publishing the Insurance (Motor Vehicles Third Party Risks) (Amendment) Bill 2010.

The proposal heralds a new legal regime, which shall be based on a structured compensation scenario comparable to international best practices. This now demonstrate the Treasury’s commitment to establish a workable regime to rein in ambulance chasers.

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In what has become a self-seeking business, ambulance chasers remain fixated in seeking out accident victims to claim heavy damage and any proceeds paid out end up lining their own pockets and leave victims with a pittance.

Thus, what has been a sustained wail of a desperate nation year-in year-out could now see progressive reform in the insurance sector. The insurance industry, however, yearns for bolder reforms including an overhaul of its regulatory regime through deliberate policy intervention measures.

What, then are these challenges and how can they be resolved?

Firstly, we must seek a collaborative partnership between the insurance industry, Law Society of Kenya (LSK), police, PSV owners, doctors, courts, the public and insurance regulators. We must put an end to multi-million shilling, money minting from the monkey business of ambulance chasing.

Rogue lawyers

Who are the beneficiaries of the current system? Why has it taken years for anyone to deal with the malaise? Will the current renewed effort succeed? We need reorientation and rethink of insurance industry reforms, including appropriate regulatory structures.

The actors include rogue lawyers acting as ambulance chasers working in cahoots with some traffic policemen, magistrates courts, auctioneers and employees of some insurance companies. Collectively, the cartels have become major influence peddlers on policy and regulatory enforcement matters.

Secondly, the fraudulent claims circle has seen multiple creation and recreation of victims with heavy damages claims. It is reported that several claims audits show common culprits of ambulance chasers and claimants.

Limited choices

It is not surprising to see claimants in the wake of an accident exceed the vehicle carrying capacity. It is the sad story of Third Party Risks insurances that have seen the collapse of several insurance companies and PSV companies.

The few companies still providing the services are operating under serious liquidity risks. As a result of the current challenges, all mainstream insurance companies have elected not to offer cover for the PSV Third Party risks to avoid losses. This trend means limited choices, but reliance on a few unstable PSV insurance companies, who in spite of having taken premiums fail to honour the underwritten obligations.

The question remains: How can the IRA allow such situation to happen? How come it remains helpless, yet the law requires it to protect the insured interests and public interests? It is not a question of ignorance, as several cases referred to IRA are generally available. IRA must remove insolvent insurance companies from the industry to protect public interest.

Thirdly, the Public Watchdog has in the past asked for overhaul of the IRA in terms of capacity and management as well as empowering it with necessary expertise and resources. Moreover, we have recommended urgent establishment of a Special Fraud Prevention Unit to be created within IRA to rein in ambulance chasers known for pervasive fraudulent acts and their collaborators. The ambulance chasers are amassing wealth, acquiring and constructing properties across the country at the expense of accident victims and/or investors.

Legal weakness

Finally, the LSK should deal with cases where some members of the legal profession engage in conduct inconsistent with advocate-client relationships. The society should also be seen to proactively make proposals to address legal weakness, which has created an environment facilitating ambulance chasing to the detriment of the accident victims’ interests.

We, therefore, say Kudos to Uhuru and urge him to initiate further reform measures in the insurance industry. The time for that reform and strengthening of regulatory capacity is now, not tomorrow, as tomorrow might already be too late, for this is a compelling matter of public interest!