Matatu insurer out to stop carrying excess passengers

The camaraderie between matatu drivers, touts and the police is like a child awaiting the arrival of a father who never disappoints with sweets. In their distinguishable luminous green reflector jackets, the cops watch the approaching matatu and in a near reflex action, one of them raises their hand to get spotted, like an excited child. 

The matatu slows down enough to pass the bribe like a relay race baton, without stopping, sometimes exchanging pleasantries or even bargaining for a free return trip.

“Siku hizi hawachukui fifty, ni mia. Maisha imepanda na pia hao wamepandisha,” the driver of the run down overcrowded matatu on the Western route between Busia and Kisumu tells me the police have raised the value of the acceptable bribes from Kes50 to kes100 on account of the high cost of living.

If the matatu is to be involved in an accident, what would happen to the 18 of us, unwittingly crumpled into the 14-seater jalopy. But if Directline Insurance that covers 65.7 percent of matatus has its way in limiting the number of claimants to the vehicle capacity, this reckless practice condoned by authorities may just come to an end.

Kenya has a poor road carnage record with Transport Cabinet Secretary Kipchumba Murkomen stating 1,072 people were killed on our roads between January and March this year. Out of those killed, 362 were pedestrians, 302 motorcyclists, 184 passengers, 101 pillion passengers, 104 drivers while 19 were pedal cyclists. CS Murkomen said the number of passenger deaths is attributed to speeding vehicles, crossing at undesignated places, distracted driving or walking and drink driving.

To solve this problem authorities are resorting to expensive technological solutions such as Driving School Management and Licensing Module to eliminate fake licenses and private sector-led inspection points that are likely to increase the cost of transportation and the acceptable bribe fee. 

But insurance companies may have just the economic incentive that might force motorists to cull the carnage or at least disincentivize overcrowding.

Read also: Moses Kuria calls for controls on bank forex trading

Insurance companies paid Kes2.2 billion in claims in passenger service motor accidents in the nine months to September 2022 with Directline shouldering almost 60 percent of the claims according to Insurance Regulatory Authority (IRA) third quarter data. 

In the previous year, insurance companies paid Kes1.2 billion in claims with industry players saying a lot of fraud is bleeding the system. A fifth of the 38 fraudulent claims recorded by the regulator were linked to motor fraud. 

Directline, which has grown over the last couple of years to command the largest market share, is using its position to change how matatus are covered. Directline is one of the estates of the late son of Media mogul Samuel Kamau (SK), John Gichia. Since the Citizen TV owner took over despite an ongoing inheritance fight, he has revolutionized the platform, embarked on aggressive marketing and gained from the collapse of competition.

Most of Directline competition including Trident, Invesco and Amaco have been struggling to meet claims sometimes leading to lengthy legal suits and use of auctioneers to recover mounting claims. A broker said that while Directline would charge about Kes9,000 for a 14-seater matatu, competition would charge about Kes5,700 but clients still preferred the more pricey company since they are better at paying claims.

IRA data shows Directline dominates the matatu sector with premiums of Kes2.4 billion in the nine months of September last year, ahead of Invesco Insurance Kes648 million, and GA Insurance Kes304.4 million. Other small players collecting less than Kes100 million in premiums include Sanlam, Kenya Orient, Trident, Heritage, Fidelity and Intra Africa which collected only Kes8 million. 

For the full year, Directline collected Kes4.26 billion according to the company financials against claims of Kes2.3 billion, posting a profit of Kes333 million in an industry segment that is usually swamped by massive losses. 

Industry players say the success of the company has come mainly by tightening their process including onboarding clients through digital channels that only allow their 320 agents, 83 brokers and 17 banks to book business only after payment has been made eliminating cases where intermediaries stay with client premiums often times never submitting it. 

The company has also introduced a short code, 23454 to verify whether a matatu has been insured or not. This verification system is used by the police once a Directline-insured vehicle is involved in an accident alerting the company who can then confirm status of the accident. 

“Before you take a bus or a matatu, you can simply send the vehicle registration number to 23454 to make sure that it is not just a sticker on the windscreen. One fraud we were seeing is where people were taking a cover then suspending it but leaving the sticker on the screen,” the firm said. 

The company now wants to move a step further to limit claims payments to vehicles that have not overloaded passengers and will soon require PSVs to operate with a manifest recording all passengers who were in a vehicle to lock out fraudulent claims. 

How this will work for the industry that has reserved the right to pick up passengers along the road and where touts regularly cheat owners of the number of passengers they carry is left to be seen. 

Directline says they have also built a system that notifies claimants when the company pays. They claim a battery of ambulance chasing lawyers often represent claimants but fail to deliver the compensation once it is paid which has eroded confidence in the market. 

PSV insurers usually have the highest complaints at the regulator with half of the top ten claimants being related to public transport insurers.