Ombudsman Comes to the Rescue of Motorists: Insurance Regulations Declared Unconstitutional

The High Court has quashed the ‘Motor Insurance Underwriting Guidelines’ of 2009 issued by the Insurance Regulatory Authority (IRA), terming them unconstitutional.
The ruling follows a case lodged by the Commission to challenge the directive which effectively set prices of premiums which all commercial insurance companies in the insurance industry would charge motorists in respect of all forms of Motor Vehicle Insurance Cover and services provided.
In its submissions, the Commission contended that the directive had the effect of making the pricing of insurance motor cover a monopoly and to convert the industry into a cartel without any supporting legislation and contrary to existing legislation, thereby killing the incentive in the provision of quality and affordable services.
The Commission further argued that the guidelines contravene the economic, social and consumer rights of Kenyans provided for under Articles 43 and 46 of the constitution and the right to fair administrative action as provided in article 47 of the Constitution and also discriminatory to the extent that they give special rights, privileges and treatment to one commercial interest group.
In its reply, the Insurance Regulatory Authority told the court that its actions were meant to shield insurance firms from losses and, at the same time give a standard to all services.
In his ruling Justice John Mativo said that the powers of IRA did not include setting prices but coming up with regulations.
“Decision makers must understand the law that regulates them. If they fail to follow the law properly, their decision, action or failure to act will be “illegal.”…I find that IRA acted outside its powers as stipulated under the law,” ruled Justice Mativo.
The court also ordered IRA to pay the Commission costs of the petition.

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