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Loopholes exploited by fraudsters

By | June 10th 2009

Insurers complain that the Insurance Act still operates on the legal implements of the Britain’s Judicature Act enactment of 1895-97.

This cannot change without a review of the law because they are subject to court interpretations.

The wordings of the insurance policy forms, confesses a general manager of a PSV underwriter, are a labyrinth even to the insurers themselves and that is why they retain a large team of lawyers to do interpretation for them.

This leaves the layman in a very precarious position as far as matters insurance are concerned, he says.

Mitigating factors

Makove says to mitigate against this state of affairs, the government will soon be rolling out a new sustainable PSV underwriting structure.

According to submissions of a task force mandated to come up with a marshal plan for PSV underwriting, one of the ways to improve on this is the creation of a mutual insurance company owned by PSV owners.

The other is the establishment of a road accident compensation fund to compensate accident victims for third party injuries.

But this is not the first time wide ranging incentives have been spelled out for the sector.

So far, attempts to create a motor pool, a key prerequisite for insurance in successful insurance markets, have failed three times because the insurers cannot agree on a system of settling claims from the pool.

Lies to lure

Salesmen promise unsuspecting Kenyans that uninsurable catastrophes will be insured just to make them buy policies.

The policy document, which is a legal document in law, is another sinkhole where the majority fall. They are aided by suspect wordings that the agent does not bother to interpret to laymen. Where most goodies are guaranteed in large print, they are sooner annulled in the fine print below.

Commercialese and legal lingo dominates the policy document, which is the evidence that you are insured.

Most lay people are more confused after reading the document than even before. As a result anomalies are only detected later, often after the perpetrators have long left the scene. Many Kenyans who have gone through the document confess of being discouraged to read by agents.

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