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{
"id": 89234,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/89234/?format=api",
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"type": "speech",
"speaker_name": "Mr. Kenyatta",
"speaker_title": "The Deputy Prime Minister and Minister for Finance",
"speaker": {
"id": 168,
"legal_name": "Uhuru Muigai Kenyatta",
"slug": "uhuru-kenyatta"
},
"content": " Mr. Speaker, Sir, I beg to move that The Insurance (Motor Vehicle Third Party Risks) (Amendment) Bill be now read a Second Time. Mr. Speaker, Sir, allow me to share with hon. Members a brief history of the insurance of motor vehicle third party risks in Kenya. The insurance of motor vehicle third party risks is mandatory for everyone operating a motor vehicle on a public road in Kenya. To this end, several insurance companies have been offering insurance to owners of Public Service Vehicles (PSVs). The PSV insurance companies have, however, faced enormous challenges in the underwriting of PSV insurance business, a situation that has from time to time threatened to destabilize the entire insurance industry. Mr. Speaker Sir, in the early 1970s, matatus were allowed to operate in all localities as PSVs with little regulation which led to disorder and hence, increased the number of road accidents. This eventually made insurers reluctant to underwrite this class of business due to the high number of claims that were unmanageable. To try and address this problem, insurance companies opted to form a voluntary pool to share the risks associated with this class of business, an initiative that failed later. Consequently, the Government formed a compulsory motor insurance pool which also failed. This led to a crisis in the country as there were no insurance providers for the compulsory vehicle third party cover. As a result, the Government formed a second compulsory motor insurance pool in 1985, which again failed and was abolished by the Government in 1989. Mr. Speaker, Sir, after the collapse of the pool a few private insurance companies ventured into the underwriting of this class of business. These companies have faced various challenges and eight of them have collapsed since 1992. As a result, most of the insurance companies have shied away from insurance of PSVs as they consider it a bad risk, such that, currently, of the 44 licensed insurance companies, only five offer insurance coverage to PSVs and the same are struggling to remain in the market. Mr. Speaker, Sir, the collapse of most of the PSV underwriters has largely been attributed to widespread malpractices and fraud, which is perpetrated by syndicates of fraudsters comprising of ambulance chasers chasing lawyers, medical doctors, private investigators, claimants, law enforcement agencies and the Judiciary amongst others. The frauds make the risk unmanageable, thus leading to the collapse of most of the insurance companies offering third party cover. The fact that a structured compensation scheme for various injuries does not exist compounds the problem even further by allowing accident victims to invariably seek legal redress under common law, opening room for ambulance chasers and other related frauds. Mr. Speaker, Sir, in order to address the aforementioned problems and help sustain insurance companies offering cover for the compulsory motor vehicle third party risk, I propose to introduce a structured compensation scheme which prescribes the maximum percentage of the existing ceiling of Kshs3 million to be payable for a specified injury. This measure will go a long way to offer sustainability on the expected levels of compensation and also mitigate against ambulance chasing and related fraud. Mr. Speaker, Sir, I beg to move and ask hon. Kimunya to second."
}