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The Nairobian

Garages lobby sues insurer over Sh24 million claim

Business

By Kamau Muthoni | May 11, 2016

A lobby group representing motor vehicle garages has sued Xplico Insurance Company over failure to pay debts amounting to millions of shillings.

In a suit filed at Milimani Commercial Courts, the Kenya Motor Repairers Association (Kemra) also sued Insurance Regulatory Authority (IRA) as an interested party for its role as protector of public interest by ensuring insurance firms meet their obligations to the insured and third parties as set out in the law.

Documents filed in Milimani High Court show that the firm owes 11 Kemra members mote than Sh24 million.

In the suit, Kemra has filed on behalf of Beca Auto Ltd, Crystal Motors, Golden Auto Centre, Midland Auto care, Naivaboch Auto Electrician, Safezone Auto Care, Stantech Motors, Top Quality Motors and Vas Auto Centre, the firms fear that in case the insurance firm goes under, their businesses may lose a lot of money and hurt their investments.

In a sworn affidavit, through Kemra Chairman Bernard Ngore says:”There is a real threat and apprehension that Xplico Insurance Company is unable to meet its financial obligations to the association unless forced so by the court.”

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In the application filed on April 27, 2016, Kemra argues that it has made numerous demands for payment, but the firm has failed to pay.

Through lawyer Mercy Mwai, the motor repairers feel the defendant will continue to abscond its duty and obligations unless the court intervenes.

However, Kihanya and Company advocates for Xplico have defended the insurer saying it is solvent and willing to meet its obligations to third parties. The law firm said claims that the insurer is insolvent amounts to sabotage and invasive. But lawyer Mwai of Koceyo Advocates asked the court to compel Xplico to deposit ‘security cost’, amounting to Sh24 million in court before the suit is heard and determined.

However, Justice Charles Kariuki sitting in Milimani High Court allowed the defense, to file a response before the court makes a ruling on the application seeking them to deposit the ‘security cost.’

Lawyer Mwai prayed for an earlier date, saying her client was apprehensive that the defendant may be put under receivership before the case was concluded. The case will be mentioned on May 19.