22 January 2014

Kenya: LSK Seeks to Block New Insurance Law

LAWYERS plan to challenge the Insurance Motor Vehicle, Third Party Risks Amendment Act, 2013 arguing that their views were disregarded.

Through their umbrella body Law Society of Kenya, they argue the new law does not give accident victims the option of taking the compensation as stipulated in the payment structure or suing, in the event of a road accident.

"We (LSK) are against the new insurance law that caps damages to Sh3 million in respect to passengers in motor vehicle accidents," said the LSK secretary and CEO Apollo Mboya in a statement yesterday.

LSK said it has instructed lawyer Fred Ngatia to file a suit challenging the new insurance law.

"The scheme is designed in such a manner as to deny victims legal representation as matter of right," Mboya said.

The Association of Kenya Insurers has however disputed this noting that the law as formulated, only caps the maximum compensation that an insurer can give to Sh3 million but does not stop an accident victim from going to court seeking for higher compensation.

According to AKI executive director Tom Gichuhi, any extra compensation will be a liability of the car owner and not an insurance firm should a victim opt for litigation to seek for more.

"Formerly it was not capped and judges would award any amount," said Gichuhi. The uncapped payouts had caused a lot of concern for insurance companies who, prior to the enactment of the new law, had argued that it created 'ambulance chasers' who were out to exploit the situation and the victims to enrich themselves.

Ambulance chasers is a derogatory term for lawyers and other service providers who rush to contact persons involved in accidents with the goal of obtaining business usually with an aim of increasing insurance payments to the victims since most of them are paid a percentage of the claim settlement for the representation service.

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