Owners of five Toyota car models, including the popular Probox, Succeed, Sienta, Passo, and Porte have been dealt a blow after some insurers opted to deny them comprehensive covers citing losses due to “misuse” of the vehicles.
In the latest development that is likely to rattle thousands of car owners, an insurance firm GA Insurance said it had also stopped issuing cover for all models of Suzuki cars valued at below Sh1 million.
GA Insurance last month informed its clients of its plans to stop issuing comprehensive covers for Toyota Probox, Succeed, Sienta, Passo and Porte, claiming that they had created problems during the settling of claims due to their misuse.
This decision was made in the wake of insurers recording huge losses in their general insurance business over the past few years, leading players to take steps to fill any gaps that could be leading to huge claim settlements.
“After a comprehensive review of our motor private book and the loss trends, we wish to communicate that there are vehicles whose usage has been misemployed and therefore have proven to be a challenge when settling claims,” GA Insurance said in the October 21 letter to its business partners.
The insurer also announced that it would no longer issue comprehensive covers for all Suzuki models valued below Sh1 million.
With a market share of 8.7 per cent for the general insurance business in the country, GA Insurance is the third largest general insurer, and its move could trigger similar actions from other insurers, dealing a huge blow to owners of the vehicles.
“We will, therefore, not underwrite the models on a comprehensive basis to ensure the smooth running of the business and maintain an excellent client experience,” the letter by GA Insurance’s head of Bancassurance, Kenneth Kagira stated.
Most of the vehicles that the insurer wants to exclude from its comprehensive cover have been largely used for commercial purposes in Kenya, with Toyota Probox popular for public transport business, transportation of goods such as Muguka, a khat (miraa) variant and other agricultural produce.
The insurer argues that the uses the vehicles have been put to have increased claims they launch, leading to losses for its business and problems when it comes to claims settlement.
A 2013 Insurance Regulatory Authority survey identified that at least 74.8 per cent of vehicles that had been covered under the comprehensive insurance were used for personal use, 11 per cent to carry owner’s goods, 3.1 per cent for passengers, 7.1 per cent operated as Taxis and 3.9 per cent were hired to carry goods. BY DAILY NATION