The regulator in charge of controlling the competition landscape in Kenya has taken action against 18 insurance companies found culpable of delaying payments to motor vehicle assessors and repairers.
The intervention by the Competition Authority of Kenya (CAK) will see the small-scale firms receive at least $323,349 (Ksh38 million) that the insurance firms have delayed paying for services rendered as far back as five years ago, in revamped efforts to reduce abuse of buyer power rampant in the sector.
Priscilla Njako, CAK’s manager for the Buyer Power department, said investigations are ongoing and insurance companies found to have abused buyer power to the disadvantage of some five small-scale assessors and 20 repairers will be brought to book.
“Such actions place thousands of livelihoods at risk since their sources of income come under unbearable and unjustifiable financial strain,” Ms Njako said.
The authority said the insurers’ actions had imperilled the livelihoods of at least 1,000 Kenyans, and severely strained the businesses.
Since the introduction of a law against abuse of buyer power in 2019, the authority says most complaints have been against insurance firms, this financial year accounting for 72 percent of all complaints lodged and investigated. This is against the backdrop of reported losses in motor insurance, occasioned by rising cases of fraudulent claims.
“Suppliers and buyers should cultivate a culture of conducting business while referencing written contracts to minimise conflicts,” CAK said in a statement.
The authority has developed model contracts that will now be compulsory in dealings between buyers and sellers in the retail and insurance sectors. The contract documents the terms of payment, conditions for termination and a dispute resolution mechanism.