An Investigation of the Problems in the Compensation System for Personal Injuries and Deaths in Motor Insurance in Kenya

Abstract

The Insurance industry plays a major socio-economic role in a developing country like Kenya. The Motor Insurance specifically is very vital in a growing economy like ours. The vast aggregation of the premiums collections provides a fund that is an important source of finance for not only the private sector but also the public sector. The motor insurance however, has reported a continuous decline in the profits record. O~e of the prevailing setbacks to the insurance industry are the problems which the present compensation system; fault-system, pose. This exploratory researh investigated into these problems and sought further to identify the possible solutions to them. The primary information for the research was collected by use of questionnaires and a number of personal interviews. The study sampled two populations that is the Insurance companies offering Motor Insurance and the Judges in the High Court and court of appeal at Nairobi. The study revealed that the insurance companies have been recording increasing losses on 'the business. Several problems emanating from the Lawyers ambulance chasing the reinsurance, the underwriting of the insurance, the characteristics of the personal injuries and death claims, the determination of the liability and quantum of damages under these claims and the fault system itself we re identified. The data collected was analysed by use of tables, percentages and/or proportions. The analysis led to the conclusion that the fault system should be replaced by a NO-FAULT system with the further encouragement of out of court settlements to eliminate all the problems affecting the nourishment of the Insurance. Alternatively the solutions suggested should be implemented to improve the present system of compensation.