Matatu claims bring down Standard Assurance

Kenya’s chaotic public service vehicle operators have brought down yet another insurance company. Standard Assurance is the latest victim of the ever increasing number of fraudulent claims particularly from the matatu sector which has been shambles since the collapse of the Michuki transport rules.
The Insurance Regulatory Authority (IRA) announced on Wednesday that Standard Assurance had been placed under receivership after failing to meet its debt obligations to policyholders. The new managers are HLB Ashvir, a consultancy firm.
Standard Assurance, the 23rd largest underwriter in a market of 38 players, yielded to market pressure at a time when the insurance industry’s fortunes have tumbled with a prolonged bear run at the Nairobi Stock Exchange that has been a key revenue stream for most players.
Access Insurance, Stallion, Lakestar Insurance, United Insirance and more recently Invesco Insurance  are some of the underwrites that have run into trouble or collapsed under the weight of heavy claims from the matatu industry.
“The PSV underwriting sector is seen as a cash cow by fraudsters,” said Mr Steve Mainda, the chairman of the IRA.
Indeed, so unique is the entire PSV business that all insurance companies that have collapsed in Kenya had tilted tier business towards matatus.
Analysts say more insurance industry players may get into trouble because investment income, which has for years been a dependable cushion against runaway claims, has withered out with the downturn at the Nairobi Stock Exchange (NSE).