Challenges faced in PSV insurance sector in Kenya:how adequate is the legal and the enforcement mechanism?
The PSV insurance sector in Kenya is facing challenges with many of its players having been placed in statutory management over the last decade. In this project, we analyze the causes of the challenges which are faced, and make an inquiry on the adequacy of the applicable law. It is found that the problems leading to the challenges are within the industry itself in the form of fraudulent claims and collusions, arbitrary awards on insurance claims, and poor distribution of risks. The law as it is, is inadequate to address these challenges. The major recommendations are that the Insurance Act be amended to give the IRA a statutory mandate to regulate financial services fraud in the insurance sector. Coordination among the various stakeholders in the insurance sector will also go a long way in eliminating fraudulent activities in the sector. Finally, the Insurance (Motor Vehicle Third Party Risks) Amendment Bill, 2013 should be passed to eliminate the problem of arbitrary awards on insurance claims.