The Insurance Regulatory Authority (IRA) has proposed measures to protect motorists from unfair insurance claim denials.
According to a new proposal by the insurance regulator, insurers will now be required to honor claims even if a driver’s license had expired or premiums were unpaid, provided the policy was not formally canceled.
The new guidelines seek to stop insurance companies from rejecting claims on unreasonable or unfair grounds.
IRA Proposals to Protect Drivers
The IRA states that an insurer shall not repudiate a claim solely on the basis of late notification without first establishing valid reasons for the delay.
Under the proposed rules, insurance firms will also be barred from rejecting claims based on the following grounds:
- Non-disclosure of material facts that a policyholder could not reasonably have known.
- Pre-existing or congenital medical conditions that had not been previously diagnosed.
- Misrepresentation, unless it is fraudulent or involves negligent misrepresentation of material facts.
- Breach of warranty or policy condition where the loss was unrelated to the breach.
- Late reporting of an incident without considering the reasons for the delay.
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- Breach of policy conditions where the policyholder was never issued the policy document at the start of the cover.
- Non-payment of premiums where the cover has not been officially cancelled or where cancellation was done through an intermediary without notifying the policyholder.
- Expiry of a driving license at the time of an accident, provided the driver was not disqualified from holding a valid license.
Furthermore, every insurer will now be required to develop and maintain a claims-handling manual detailing each step from claim intimation to settlement across different insurance classes.
The manual must also specify clear timeframes for each stage, in line with the provisions of the Insurance Act.
About the Authority
The Insurance Regulatory Authority is a statutory government agency established under the Insurance Act, CAP 487 of the Laws of Kenya, to regulate, supervise, and develop the insurance industry.
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It is governed by a Board of Directors, which is vested with the fiduciary responsibility of overseeing the Authority’s operations and ensuring they are consistent with the provisions of the Insurance Act.
Some of its functions include:
- Ensure the effective administration, supervision, regulation, and control of insurance and reinsurance business in Kenya
- Formulate and enforce standards for the conduct of insurance and reinsurance business in Kenya
- License all persons involved in or connected with the insurance business, including insurance and reinsurance companies, insurance and reinsurance intermediaries, loss adjusters and assessors, risk surveyors and valuers
- Advise the Government on the national policy to be followed in order to ensure adequate insurance protection and security for national assets and national properties
- Issue supervisory guidelines and prudential standards from time to time, for the better administration of the insurance business of persons licensed under the Insurance Act
- Conduct inquiries and share information with other regulatory authorities, and carry out any other related activities in furtherance of its supervisory role
- Regulate the business of bancassurance offered by banks in the same manner as the ordinary insurance business, including capital requirements and disclosures
- Undertake such other functions as may be conferred by the Insurance Act or any other written law
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