Listen to This Article Enhance your reading experience by listening to this article.

Kenya’s public transport sector is on the cusp of paralysis, with 400 matatu saccos threatening to strike following the government’s decision to place Invesco Assurance Company Limited, the Public Service Vehicles (PSVs) insurer, under statutory management.

This move has led to significant financial losses, with billions of shillings lost in compensation for policies and other costs associated with auctioned vehicles.

The situation escalated following the cancellation of insurance policies held with Invesco Assurance, which the operators claim has resulted in the loss of over 1,000 vehicles to auctioneers.

Speaking on behalf of the saccos, Paul Thiong’o, the chairman representing all sacco leaders, demanded that the government provide policyholders with a one-month notice before canceling any policies.

“As industry leaders, we are demanding that the government give Policyholders with Invesco Assurance Company a one-month notice before the cancellation of policies,” said Paul Thiong’o, the overall chairman of Saccos.

Thiong’o also urged the Inspector General of Police to instruct officers not to impound vehicles insured by Invesco until their policies expire.

The crisis stems from a letter dated August 14, in which the Insurance Regulatory Authority (IRA) announced the placement of Invesco Assurance under statutory management, as per Section 67C (2) (i) of the Insurance Act.

The letter, signed by the Commissioner of Insurance, stated that the Policyholders Compensation Fund (PCF) would act as the statutory manager for Invesco, effectively barring the company from entering into new insurance contracts. The IRA advised existing policyholders to seek alternative coverage from other licensed insurers, including Direct Assurance Limited and AMACO.

Statutory management

The PCF has been tasked with compensating affected claimants as outlined in the Insurance Act. Upon taking charge, the PCF immediately announced that all existing policies issued by Invesco were canceled as of the start of statutory management on August 14, 2024.

Additionally, a 12-month moratorium on payments from the insurer to policyholders and other creditors was imposed, further exacerbating the concerns of matatu operators.

During a press briefing at the Kencom Bus Stage over the weekend, representatives of the saccos expressed their frustration with the situation. They highlighted the plight of policyholders who, despite paying their premiums, wake up to find auctioneers ready to tow their vehicles without prior notice.

The saccos urged IRA to reconsider Cap 487 of the Insurance Act, which limits compensation to Sh250,000 when a company is placed under statutory management. This cap, they argued, leaves vehicle owners exposed, forcing them to pay more than Sh700,000 in cases where the vehicle is valued at Sh1 million.

The cancellation notice issued by the IRA for Invesco Insurance has further angered matatu operators, who are opposed to the limited choice of insurers now available to them, particularly AMACO, which they argue lacks sufficient experience in the transport industry.

Expressing the growing frustration within the industry, Njogu noted that vehicles purchased for Sh5 million are often sold at auction for as little as Sh400,000, a devastating loss for operators. Wambugu Kanoru, Coordinator of the Matatu Movement Kenya, issued a stern warning about the impending strike. “If by Tuesday, the government has not responded to our demands, no vehicle will be on the road. We are going to paralyze services across the country,” he declared, signaling a looming crisis in Kenya’s public transport sector.