Parliament Probes Insurance Crisis Affecting Matatu Sector

The National Assembly Committee on Public Petitions has continued its inquiry into Public Petition No. 17 of 2024, which calls for Parliament’s intervention to address what the Matatu Owners Association has termed “systemic failures and unfair practices” in the regulation and management of Public Service Vehicle (PSV) insurance.

In its latest session, the Committee met with representatives from the Federation of Public Transport Sector (FPTS) and the Association of Kenya Insurers (AKI) to receive submissions on the petition.

Speaking during the meeting, FPTS Chief Executive Officer Kushian Muchiri urged Parliament to review several key laws governing the motor insurance sector — including the Insurance (Motor Vehicle Third Party Risks) Act, the Insurance Act, the Traffic Act, and the Small Claims Court Act — to promote fairness, accountability, and transparency in handling insurance claims.

Muchiri said the current legal framework for personal injury claims has been open to abuse and fraud, negatively affecting both insurers and genuine accident victims. He argued that the application of the Small Claims Court system to such cases was “procedurally inadequate,” as it limits the ability of insurers to cross-examine witnesses and verify key evidence such as medical reports and contributory negligence.

The petitioners also cited the collapse of several PSV insurance companies over the past two decades — including Invesco, United, Xplico, Blueshield, and Concord — as proof of deep-rooted structural weaknesses in the industry. They attributed the failures to rampant fraud, unsustainable premium undercutting, and the absence of a digital system to track insurance claims.

AKI Executive Director Tom Gichuhi supported several points raised in the petition, acknowledging that fraud and price undercutting have made PSV insurance unprofitable. He called on Parliament to strengthen the powers of the Insurance Regulatory Authority (IRA) to issue premium pricing guidelines and enhance coordination between the IRA, National Transport and Safety Authority (NTSA), and National Police Service in verifying claims.

Committee Chairperson Karemba Muchangi said the concerns raised by the Matatu Owners Association reflect a wider national challenge that requires urgent government action.

“The Association of Matatu Owners is rightfully before us seeking intervention because there is need for proper regulation of the sector. The issue of unsettled claims is a national problem that must be addressed,” he said, questioning why operators continue paying premiums when claims remain unresolved.

Members of the Committee also urged the Matatu industry to strengthen self-regulation and discipline among operators to help reduce road accidents and insurance losses.

Committee Vice-Chairperson TurboMP Janet Sitienei linked many PSV accidents to driver negligence, urging association leaders to enforce stricter safety and service standards.

“It is you, the officials seated here, who can push the various Matatu operators to follow rules and ensure passengers are served safely and responsibly,” she said.

Kangema MP Peter Kihungi called for greater collaboration among the IRA, NTSA, and the Ministry of Transport, emphasizing that the sector’s challenges require collective solutions rather than blame games.

The Committee resolved to invite the Insurance Regulatory Authority (IRA) to present its official position on the petition in its next sitting, as it works toward comprehensive reforms in the PSV insurance sector.