IRA Appears Before Public Petitions Committee Over Failure to Protect PSV Operators

The Insurance Regulatory Authority (IRA) has told Parliament that only three insurance companies in Kenya are currently licensed to offer Public Service Vehicle (PSV) insurance, even as concerns mount over widespread unpaid claims and regulatory failures within the sector.

Appearing before the Public Petitions Committee on Wednesday, October 15, 2025, IRA CEO Godfrey Kiptum responded to allegations raised in Public Petition No. 17 of 2024, filed by Machakos MP Caleb Mule, accusing the Authority of failing to protect public transport operators from mounting insurance disputes.

The session was chaired by the Committee’s Vice-Chairperson, Hon. Janet Sitienei (Turbo).

Only Three Companies Allowed to Offer PSV Insurance

Kiptum told MPs that the PSV insurance market is currently limited to:

• Directline Assurance Company Ltd

• Africa Merchant Assurance Company Ltd (AMACO)

• Definite Assurance Company Ltd

He noted that PSV insurance remains “inherently high-risk”, and the industry has historically been unable to offer sustainable premium rates due to competitive pressures.

According to the CEO, PSV policies mostly cover:

• Third-party death

• Permanent disability

• Medical expenses

• Supplementary injury-related costs

“The cover does not extend to the PSV vehicle itself, the driver at fault, or their families,” Kiptum clarified.

Committee Questions Continued Collection of Premiums

Hon. Sitienei questioned why the Authority continues to allow insurers to collect premiums from matatu and bus owners while failing to settle legitimate claims.

In response, IRA pointed to several administrative enforcement measures, including:

• Placing troubled insurers under statutory management

• Appointing board directors to strengthen governance

• Enforcing prudent financial management systems

Kiptum added that IRA has prosecuted directors and senior officers who knowingly fail to comply with the Insurance Act or unlawfully refuse to settle claims.

“If found guilty, such individuals face a fine of up to Sh5 million or imprisonment of up to two years,” he said.

Public Transport Federation Raises Alarm Over Claims System

Representatives of the Federation of Public Transport Sector (FPTS), led by Chairperson Kushian Muchiri, also appeared before the committee and raised concerns about procedural gaps in handling personal injury claims.

Muchiri argued that the Small Claims Court framework is inadequate for road-traffic-related injury cases, especially those requiring medical evidence and complex fact-finding.

He further highlighted challenges arising from Section 10(2) of the Insurance (Motor Vehicle Third Party Risks) Act, which mandates a 30-day pre-litigation notice.

According to FPTS, these notices often come too late for insurers to investigate, leading to:

• Difficulty verifying claims

• Distorted solvency calculations

• Weakened anti-fraud mechanisms

“Claims frequently emerge long after the financial year-end, making it impossible for insurers to intervene meaningfully,” Muchiri said.

Concerns Over Legal Manipulation and Fraudulent Claims

FPTS also raised alarm over unethical practices within legal circles, including:

• Manipulation of service affidavits

• Ghost claimants

• Inflated legal fees

Muchiri said these issues persist due to the absence of a national advocate claim-conduct registry, allowing unscrupulous practitioners to operate unchecked.