Insurers call for clear guidelines on car write-offs

Insurance industry players are calling for clear policy guidelines to stop condemned vehicles from find their way back on the Kenyan roads, usually with devastating effects.

Sammy Muthui, Minet Kenya Insurance Brokers Ltd CEO said a National Salvage Handling and Management Policy would prescribe what happens to the various levels of salvages, adding that lack of a motor vehicle salvage policy in Kenya is putting many lives at risk. “Each insurance policy needs to have a salvage handling and management clause separate from the subrogation clause,” he said.

Identification plates

Muthui explained that under the Kenya’s Traffic Act Cap 403 -Section (9), if a vehicle is written-off by an insurer, the insurer is required to immediately return the registration book and identification plates issued under this Act or the regulations to the Registrar for cancellation.

“However, with the absence of this policy, many Kenyans are risking their lives driving these salvaged vehicles,” he said. In the general insurance practice, an insurance salvaged vehicle is one that is so damaged to an extent that it structurally cannot be repaired to a roadworthiness state and hence not legally allowed to be driven on Kenyan roads.

Muthui said majority of insurance companies in Kenya lack a clear salvage policy embedded in their claims handling, with such decisions to a large extent, left under the control of individual claim handlers and motor assessors.

“The nearest resemblance is only seen during importation of pre-owned and used motor vehicles from other countries, where the seven0year rule prevails,” he added.

Even then, he said, this has often brought a level of confusion, as to whether the test is on the date of manufacture or first registration in the country of origin.

Muthui said though most insurer/broker systems have the ability to mark a vehicle as a write-off, these do not have a further classification of “to scrap or not,” one of the grey areas perhaps being exploited by some sector players to bring back condemned vehicles on the Kenyan roads.

He said the issue of write-offs has remained a matter of debate in Kenya for a long time, with a general lack of appreciation of all the possible sources of salvages. He said focus is rather myopic and restricted to the insurance industry claims which are often viewed as fraudulent.

“I suppose because it is often possible to establish a vehicle’s insurance history – think of the government vehicles that have spent their life and often auctioned as scrap, or uncollected vehicle units at the port of Mombasa, or scrapped parastatal vehicles, or company vehicles or abandoned by individuals,” he said.

Muthui stated that brokers are only able to identify a written-off vehicle that was in their books and not any other, but are still restricted since they have no control over whom the insurer disposes the same to.