1.0 THE INSURANCE INDUSTRY IN KENYA-AN OVERVIEW. The concept of insurance has been around Africa for a long time. Members of a community pooled together resources to create a “social insurance fund”. The “premiums” ranged from material to moral support or other payments in kind. From the fund, “drawings were made out” to support the few unfortunate members exposed to perils.1 However, the history of the development of commercial insurance in Kenya is closely related to the historical emancipation of Kenya as a nation. With the conquest of Kenya as a British colony, settlers initiated various economic activities, particularly farming, and extraction of agricultural products. These substantial investments needed some form of protection against various risk exposures. British insurers saw an opportunity in this, and established agency offices to service the colony’s insurance needs. Prosperity in the colony soon justified expansion of these agencies to branch networks with more autonomy, and expertise to service the growing insurance needs. By independence2, most branches had been transformed to fully-fledged insurance companies. Since then, Kenya’s insurance industry has flourished.3

The insurance industry in Kenya is governed by the Insurance Act4 which was enacted in the year 1985. After independence in 1963, the Government of Kenya saw the need to have control over the insurance industry, which was then dominated by branch offices of

Rand Graham K, ‘diagnosis and improvement of service quality in the insurance industries of Greece and Kenya, see also 2 Kenya gained independence in 1963 from the British 3 By the year 2002, the insurance industry in Kenya had a total of 41 registered insurers. 4 Cap 487 of the laws of Kenya

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foreign companies particularly from Europe and India. During this period, insurance operations were governed by the Companies Act 1960, which was based on the United Kingdom legislation. There was, therefore no competent body to supervise the industry. There was a great need to localise the branch offices of foreign insurance companies in the country in order to benefit the local investors. This resulted to the need for statutory supervision of the industry. In 1978, the Minister for Finance issued a directive stopping the operations of branch offices of foreign companies and all insurance companies were required to be locally incorporated. Thereafter, in the early 1980's the Government with the support of United Nations Conference for Trade and Development started the process of drafting a law to regulate the insurance industry.

In 1986, the Insurance Act was enacted.5

The Act established the Office of the

Commissioner of Insurance as the regulator of the insurance industry and stipulated the mandate and functions of the office.6 This office was created as a department in the Ministry of Finance and was mandated to supervise the insurance industry. In order to enhance the supervisory capacity of the regulator, the government delinked the department from the Ministry to give it some autonomy. The Insurance (Amendment)

With the commencement date being 1st January 1987 Section 3E of the Insurance Act makes provisions that, there shall be appointed by the Board, in consultation with the Minister, on such terms and conditions of service as may be determined by the board in the instruments of appointment, or otherwise in writing from time to time. The commissioner under subsection 2 shall be an ex officio member of the Board but shall have no right to vote at any meeting of the Board. The commissioner under subsection 3 shall, subject to the directions of the Board be responsible for the day to day management of the affairs of the authority. Subsection 4 states that a person shall be qualified to appointed under this section if such person has considerable knowledge , competent and at least 10 years experience in a managerial capacity in insurance, accounting, finance, actuarial science or banking and is not engaged in the Insurance Business as a Director, employee, officer or shareholder of any insurer, broker, insurance agent or in any other sector of the insurance industry, and if appointed shall be disqualified if he, his spouse or dependant child becomes such director, employee, officer or shareholder.


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Act number 11 of 20067 established the Insurance Regulatory Authority (IRA)8 with the Commissioner of Insurance as the Managing Director and the Chief Executive Officer to take up the role of regulating, supervising and developing the insurance industry. This body replaced the functions of the Commissioner of Insurance9. The role of the Authority10 is to ensure the effective administration, supervision, regulation and control of insurance and reinsurance business in Kenya. To license all persons involved in or connected with insurance business, including insurance and reinsurance companies, insurance and reinsurance intermediaries, loss adjusters and assessors, risk surveyors and valuers. To protect the interests of insurance policy holders and insurance beneficiaries in any contract of insurance. To promote the development of the insurance sector and to advice the government on the national policy to be followed in order to ensure adequate insurance protection and security for national assets and national properties and undertake such other functions as may be conferred on it by this Act by any other written law. The Insurance Regulatory Authority also advocates for an effective regulatory framework to ensure a quick settlement of insurance claims without court cases. The regulatory authority thus advocates for the implementation of the no fault insurance system.

It was enacted on 30th December 2006 and became effective on 1st May 2007. This is provided for under section 3 of the Insurance Act. This section states that, there is established an Authority to be known as the Insurance Regulatory Authority. That the Authority shall be a body corporate with perpetual succession and a common seal and shall in its corporate name be capable of suing and being sued, taking, purchasing or otherwise acquiring , holding, charging or disposing of movable or immovable property. Borrowing or lending money and doing or performing all other things or acts for the furtherance of its functions under the provisions of this Act, this may be lawfully done or performed by a body corporate. 9 Which are spelt out in section 5 of the Act as being to formulate and enforce standards in the insurance industry, to standardise contracts of compulsory insurance, to streamline drafting of insurance contract in order to avoid unfair terms and to approve tariffs and rates of insurance 10 This is stipulated under section 3A of the Insurance Act.



1.1 Underwriting Risk For an insurance company to underwrite a risk, it must accept an offer from the insured person through the proposal form.11 The risk on the other hand is the event against which the insurance is taken out. The event which will cause loss has to be particularised. The conditions under which that loss may lead to a successful claim also have to be mentioned. In this regard, when an insurer issues a policy or makes an express acceptance of the proposal form, then a contract of insurance is said to be complete. However the insurer can reject a proposal form and be in no way liable to explaining reasons for rejecting the proposal form.

1.2 Motor Insurance In Kenya

Motor insurance in Kenya is governed by the Insurance (Motor Vehicle Third Party Risks) Act12 which is essentially a public liability devise to provide for the compulsory insurance to protect the public for road traffic injuries and to forestall the effects of adverse selection on the insurers. It is cited as an Act of Parliament that makes provisions against third party risks arising from the use of motor vehicles. The Act13makes provisions with regard to the fact that any person who uses, or causes or permits any other person to use, a motor vehicle on a road must ensure that there is in force in relation to the user of the vehicle by that person or that other person, as the case may be, such a


The proposal form is said to be the vehicle through which the offer is made. It highlights the nature and condition of the subject matter of insurance, the extent of the risk to be insured and the type of liability to be covered. 12 Chapter 405 of the laws of Kenya with the commencement date being 1st October 1946 13 Ibid


and upon a second or subsequent conviction for any such offence shall. being contracts effected by way of business(and not merely incidental to some other business carried out by the person effecting them) in return for the payment or one or more premiums. the supply of funeral. unless the court for special reason thinks fit to order otherwise. Business sin relation to the benefits provided for its members or their dependants by an association of employees. administration bonds. be disqualified from holding or obtaining a driving licence or provisional licence under the traffic Act for a period of twelve months from the date of such conviction or for such longer period as the court may think fit. by a person carrying on no other insurance business of contracts of such description as may be prescribed. an insurer means a person. The effecting and carrying out by a body (not being a body carrying on an insurance business) that carries on business which is insurance business apart from this paragraph of capital redemption contracts. burial or cremation services with or without the supply of goods connected with any such service and no other benefits.16 There is a penalty if the owner of the motor vehicle required to be covered does not take out cover to protect third parties. bail bonds or custom bonds or similar contracts of guarantee. Subsection two of the above mentioned section provides that. The effecting or carrying out of contracts to pay annuities on human life and any business as so defined but does not include business in relation to the benefits provided by a friendly society or trade union for its members or their dependants.policy of insurance or such a security in respect of third party risks. except benefits incidental to the scheme or arrangements. Section 4 Insurance business id defined under section 2 of the Insurance Act to mean the business of undertaking liability by way of insurance (including re-insurance) in respect of any loss of life or personal injury and any loss or damage or compensation. the effecting and carrying out by a person not carrying on a banking business of contracts for fidelity bonds. The policy must be issued by a person who is authorised to carry out insurance business15 in Kenya otherwise referred to as an insurer. and such person upon a first conviction for such offence may. contingent upon the happening of a specified event. 16 According to the Insurance Act (cap 487) of the laws of Kenya. and includes. Business consisting of the effecting and carrying out. Business declared by the minister by notice in the gazette not to be insurance business for the purposes of this Act. being contracts under which the benefits provided are exclusively or primarily benefits in kind. registered under the insurance Act who carries on insurance business and includes a re insurer. Any person who contravenes the provisions of subsection one shall be guilty of an offence and liable to a fine not exceeding ten thousand shillings or to imprisonment for a term not exceeding two years or to both. 15 14 5 .14 This very aspect represents the scope of compulsory cover. business in relation to a scheme or arrangement for the benefits consisting of. performance bonds.

19 In Browns v Roberts (1965) 1 QB 1 at 15 Megaw J.In this regard. 6th edition. if the use of such motor tractor or other motor vehicle on a road consists only of moving it by road from one part of the land of the owner thereof to another part of the land of such owner. The policy however does not cover liability in respect of the death arising out of and in the course of his employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment. The other specifications under Sections 4 and 5 are in lieu to the use of a vehicle. Birds modern insurance law. or to a motor tractor or other motor vehicle used solely or mainly for agricultural purposes. or any contractual liability on a road consists only of moving it by road from one part of the land of the owner thereof to another part of the land of such owner. liability in respect of the death of or bodily injury to persons being carried in or upon or entering or getting on to or alighting from the vehicle at the time of the occurrence of the event out of which the claims arose. whereas permit.17 This however changes if the vehicle is totally immovable. 6 . The use of a vehicle in this case includes leaving a vehicle on a road or other public place. The word “cause” involves an express or positive mandate to use a car in a particular way. The main words used are the ‘use’ and to ‘cause’ or ‘permit’. even though it is incapable at present of being mechanically propelled. the aspect of taking out such cover is not optional. This covers risks causing death or bodily harm to a passenger. as per Lord Wright in McLeod 17 18 Elliot v Grey (1960) 1 QB 367 John Birds.18 In instances where a person is not in control of their vehicles. they are not governed by the principle of use19. held a driver who hit a pedestrian as she was opening the door to her car was not liable as she was not causing or permitting her to use it thus not liable in damages for breach of statutory duty in not insuring her against her potential liability. (2004) at page 374. The section shall not apply to any motor vehicle owned by the Government.

24 {1973} A. Section seven of the Insurance (Motor Vehicle Insurance) Act provides that a certificate of insurance must be issued to a person to whom a policy of insurance is effected21.22 The consequence of a failure to license a public service vehicle is two fold. 20 7 .C 127. In this regard. In Morgans vs. this was insured for business use only. The House of Lords held that the owner of the { 1940}. it is a criminal offence under the Traffic Act23 . That person was negligent and caused an accident that injured the passengers. and of any matters as may be prescribed and different forms and different particulars may be prescribed in relation to different cases and circumstances. Launchberry24 the permitted driver. the man authorized his brother to buy a van instead. However the certificate of insurance is only evidence that a policy has been taken out but is not of itself a contract of insurance. but was in fact used for private purposes.R 179 at 187. The aspect of vicarious liability that is commonly dealt with in most motor claims continues to raise a strong point as to the guarantee of compensation of the injured parties. 2 ALL E. the husband of the insured gave permission to another to drive the car. the aspect of compensation cannot act retrospectively. any person who suffers loss as a result of failure to take out the policy can sue in tort and recover damages from the owner of the vehicle. where a man appointed his brother as manager of his farm and bought him a car that was insured for business and private use.vs. Buchanan20 is looser and denotes an express or implied licence to use a vehicle. The fact that a certificate of insurance is issued after an accident has already occurred does not lay any liability on the insurer to satisfy any claims arising from the culprits of the accident. First. It was held that the man had permitted his brother to use the van while uninsured. on second or subsequent conviction to a fine not exceeding ten thousand shillings or to an imprisonment not exceeding one year or both. Secondly. 22 Supra fn 7 23 Cap 403 of the laws of Kenya under section 95 on first conviction to a fine not exceeding five thousand shillings or to imprisonment for a term not exceeding six months or to both. The van was given to him for the same purposes as the car and the brother was not told to use it for private purposes. The car having proved unsatisfactory. 21 Section seven under subsection two provides that such certificate of insurance shall be in the prescribed form and shall contain such particulars of any conditions subject to which the policy is issued.

1. it is clear that the reason for the enactment of this Act was for the protection of the injured third parties incase of road traffic accidents. From the foregoing. whichever is later. before commencing to carry on that business or before the expiry of 3 months from the appointed date.vehicle was not liable.3 Insurance Hurdles Facing The Motor Industry The insurance industry has been under close scrutiny with little or no action since the year 1989. It specifically provides under subsection 1 that. 27 Section 75 of the Insurance Act makes provisions in regard to premiums rates of general insurers.B 245 at 253. then the insurers were not liable to indemnify the passengers because the driver did not have the owner’s permission. the industry was in a crisis which led to the appointment of a presidential commission of inquiry whose primary sources of reference was to among others inquire: into all aspects of the insurance industry in particular relating to the insurance of motor vehicles and reasonableness or otherwise of premiums26 payable. Most Kenyan courts throw out running down traffic matters on the aspect of lack of proof of vicarious liability. Lord Denning on appeal25 stated that if the owner was not liable. an aspect that this paper seeks to remedy.27 25 26 {1971} Q. In this regard it is essential for the government to establish the motor insurers’ bureau which would be clothed with the mandate of settling claims where there are uninsured drivers in the absence compulsory insurance. In that year. Subsection 2 mandates insurers who intend to alter or revise the schedule or manual to file with the commissioner the details of such alterations at least 60 days before giving effect 8 . Premium is defined under the Insurance Act to include consideration for the granting of an annuity. a schedule or manual of rates of premiums proposed to be used by the insurer for each class of business. What the law has done instead is require the proof of fault from the injured person in order to find the owner of the motor vehicle liable in damages. an insurer carrying on general business shall file with the commissioner.

Page 8. The committee recommended the adoption of the two-tier no fault scheme of a reasonable ceiling of 1. The Lawyer. The recommendations have never seen the light of day. The attempt by the Association of Kenyan Insurers (AKI) to introduce the two-cheque system of payment was meant to bar advocates from to such alterations. The Law Society of Kenya was also concerned by the fact that some insurance companies were issuing dishonoured cheques and even settling damages in instalments.Secondly.5 million which meant that persons claiming less than 1. Access and National Assurance among others has been attributed to the fact that the courts award very high damages and also that most of the clients are non existent thus much of what is awarded ends up in the advocates’ pockets. Musila29 was of the view that inordinately high awards in accident cases would lead to monstrously high premiums for insurance of all sorts and that is to be avoided for the sake of everyone in this country. Invesco Insurance Company. Delta. September 1999. Chamden & Islington Area Authority30. United assurance. Subsection 3 mandates the insurer to file with the commissioner of insurance particulars of the rates of premiums charged outside the scope of the manual within 30 days of such charges.28 Hancox J in the case of Mariga vs. ‘Insurance Companies Battle With Lawyers over Accident Claims’.s 28 Mugambi Nthiga. the commission was to find ways and means of limiting by legislation or otherwise the maximum compensation to be awarded for motor vehicle accidents. Among the reasons for such recommendation was the fact that the insurance companies felt that the courts were awarding excessive damages on accident compensation claims.5 million would not be required to file any court proceedings. 29 [1984] KLR 251(1982-88) 1 KAR 507 30 [1979]2 All ER 910(CA) 9 . The recent wave of collapse of insurance companies such as Lakestar insurance. This was also the view of Lord Denning in the case of Lim Pah Choo vs.

The system was contested in court by an advocate to whom a separate cheque was paid to him and another to his client. ‘ to by pass legal agent for the third party does not seem right where the agent refuses to give consent’. the conduct of insurance companies in this country is however a matter of public interest. policyholders. This thus enables most victims who could not otherwise have afforded instruction fees to sue. In light of the foregoing. The case was Susan Muteti versus Kenya bus services limited. To protect it from fraudulent claims. 31 HCCC No.representing clients who cannot afford to pay for instructions. and still is in most instances that lawyers take up the accident case without any instruction fees and pay themselves after the court has awarded damages. suppliers of goods and services and the industry at large. the ministry of finance continues to license more players into the industry. other insurers. there is need to accord the insurance industry the attention it deserves. 4972 of 1987 10 . This continues to stir erosion in consumer confidence that news of such liquidation invariably invokes.31 The late Justice Mango described the attempt by the Association of Kenyan Insurers as haughty and ambitious and went on to add that. The custom was. The fact that most of them are not willing to settle claims out of court for a reasonable amount while some are not willing to pay at all have made them gravely unpopular with the general public. to protect the members of the public from unscrupulous lawyers and crooked insurance companies. In my view. Even as more motor insurance companies continue to sink. The collapse of such companies has diverse implications on innocent third parties. The circular proposing the two cheque system was thus struck down by the court.

The up shot in this argument is the fact that in the process of proving fault. 2008. Roadworthiness standards may decline unless there are effective penalties within the system for noncompliance.32 It is thus very expensive to establish an insurance company and to have the same going into liquidation. most third parties are denied compensation because of lack of proof of negligence. July 22. Section 32 states that an insurer applying for registration under this Act shall deposit and keep deposited with the central bank of Kenya in Kenya government securities estimated at the market value of the securities estimated at the market value of the securities estimated at the market value of the securities on the day of the deposit. where the application is in respect of general insurance business.000 in respect of long term business and 50.While commenting in regard to the collapse of Invesco which was a leading Public Service Vehicle (PSV) underwriter. at page 10 32 11 . then they must deposit with central bank in government securities a sum of 150. In this regard. This will in turn affect the third parties who will be running to court seeking damages at the occurrence of an accident which will be more prevalent due to the negligence of the drivers. The insurance industry has ignored the services of actuaries in projecting the scope of their businesses. most insurance companies do not keep track of their Part IV of the Insurance Act deals with deposits. a sum of 5 million shillings. Public transport regimes that are not subject to periodic review from the government as the situation in Kenya is will require a stronger institutional body to ensure safety thus very high premiums. Mr Njenga.000 in respect of general business annually until the value reaches that aforementioned under subsection 1.’ Can Statutory Manager Rescue Broke Invesco’. the receiver-manager stated that the capital required to revive the collapsed insurance company equals the cost of registering and obtaining a new license for a new company. 33 Kaburu Mugambi.33 Another aspect of disservice to the motor insurance industry is the state of Kenyan roads and the public transport system. In this regard thus. Subsection 2 provides that for persons who had already registered prior to the appointed date. Daily Nation.

the service delivery needs to improve particularly in the reliability and responsiveness of operators. frequency and severity of claims and claim settlements relative to expectations are also other hurdles facing the insurance industry. This signifies the necessity of having an insurance sector that can add more to the economic development of the country therefore a huge potential for the insurance business in Kenya. Its inadequacy flows 34 Sundeep K Raichura.37 Ambulance chasing and referring patients to persons who are not fully qualified to be in the medical profession also misleads the court in its award of damages. 35 Ibid 36 The penalty for non compliance with the provisions of section 75 of the Insurance Act is a fine not exceeding 50. 37 This is provided for under section 48 of the Evidence Act. inadequate reinsurance protection and inadequate reserves also constitute some of the great impediments to the growth of this industry.34 Kenya is under-insured at a penetration rate of 2. The fact that most police officers will require payment in order for them to testify in court is against the spirit of justice anywhere in the world. A corrupt and inadequate police system is also another major impediment when it comes to the motor insurance industry. making them go into insolvency without any anticipation.36 Unethical medical and legal practice is also another hurdle in the motor insurance business.000 and if the offence is continuing.7% penetration for a population of over a billion and population of 44 million. This compares poorly with India at 3.6% for a population of 33 million. June 2007.35 In my view. ‘The actuarial profession Kenya’: presented at 3rd international meeting of leaders of the actuarial profession in Africa. a further 2. Inaccurate pricing of premium. This fine is too minimal for this offence hence the constant misuse of this provision.000 for every day that it continues. Fluctuations in the timing.future financial prospects. The provision of conflicting medical opinions propels the injustice in the award of damages with regard to judgements based on expert opinion evidence. Cap 80 of the Laws of Kenya 12 .

injury to a human body occurs when there is evidence of deterioration in function of the human body.39 The award of damages is guided by the compensatory principle. Measure of damages for bodily injuries. The term damages is defined to be the monetary compensation awarded by a court in the course of trial against the defendant for the benefit of the plaintiff for injuries sustained or loss suffered by the plaintiff in the hands of the defendant. either temporarily or permanently as a result of one or more particular physical damage. Therefore damages should place the plaintiff in the position he should have occupied before sustaining his injuries. or exposures to unsatisfactory occupational situations. 1. The general rule for the measure of damages for personal injury which cannot be calculated in terms of money or R.4 The Adequacy of Damages In Motor Accident Claims The aspect of damages in accident claims is derived from the severity of the injuries sustained. especially by an external force38. This paper thus seeks to remedy these hurdles and introduce schemes. imposition of mental strains. 39 38 13 . The word injury is defined as harm or hurt and is usually applied to damage inflicted on our body. This is the principle relating to the various aspects that should be put into consideration before a court can informatively decide how much such compensation is worth. (2006) Law Africa Ibid 40 This means that an award of damages is meant to be compensatory in nature meaning that the plaintiff should receive no more or no less of his actual loss. For legal purposes.from the non provision of ample and conclusive investigations in the event of a road traffic accident. laws and institutions that will contribute to this end. This principle is also latinised restitutio in integrum40. Kuloba.

various types of harm should be taken into consideration. It should be a realistic amount that will compensate the injured party for all he has suffered. In assessing damages. This exempts the causative aspects outside the scope of accident. The other aspect is the issue of contributory negligence whereby the plaintiff is liable for the failure to take any mitigating steps to avoid the accident. These are further categorised as either pecuniary damages which constitutes Supra note 3. These two exceptions limit the plaintiff’s recovery to loss other than the actual loss. first. under all circumstances a fair compensation41. the principle is subject to the rules of law as to the remoteness of damage which limit potential endless liability within reasonable bounds. The passage of time which has brought about a change in conditions also indicates the awarding of bigger awards than hitherto made in a case of similar nature42. if unreasonably large or unreasonably inadequate. The award of damages for personal injuries should be fair but not perfect. These are also referred to as the heads of damages. all he will suffer and all he will have to incur directly as a result of the accident. The compensatory principle however has exceptions. It should however be remembered that the amount awarded should not be overly generous. This means that in actions for torts which result in non-pecuniary personal injury a court must not attempt to give damages to the full amount of a perfect compensation for the injury. and give what it considers. Wachira kimondo v Kenneth L Hunter[1971] High Court of Kenya at Nairobi civil case number 169 (unreported) 42 41 14 . but must take a reasonable view of the value is that the amount is entirely in the disposition of the trial courts subject to the supervision by superior courts of law.

1. the court takes into consideration not only the suffering that the plaintiff had immediately after the accident but also what he is likely to incur even in the future as a result of the accident. Damages are meant to be palliative. the pain undergone.44 Non pecuniary damages may generally be classified under pain.loss of earning capacity and the expenditure on injuries created by the accident43. suffering and shock which may be physical or mental.4. in order to enable the plaintiff to purchase alternative sources of satisfaction to replace those lost and to meet hidden expenses caused by the injury. 43 44 Referred to as special damages England. (Cmnd 7054 1978) (Report of the Royal Commission) 15 . For pain and suffering. These losses are incalculable. The award of money cannot however be sufficient to regain the plaintiff’s physical health but it is usually awarded as a means of improving the plaintiff’s life after the accident. Non pecuniary damages constitute damages for pain and suffering. loss of expectation for life and loss of amenities. the advocates representing the injured persons in their submissions give decided cases with similar or related injuries to support their claim. it should consider the bodily injury sustained. the effect on the health of the sufferer whether temporary or permanent.1 Non -pecuniary damages The essence of awarding non pecuniary damages is to attempt to give the plaintiff some pleasure or solace for the harm suffered and to treat all plaintiffs fairly. the special costs incurred in the healing process. loss of amenities or capacity for enjoying life or loss of life in the case of fatal accidents. This is referred to as the doctrine of stare decisis.civil liability and compensation for personal injury. In Kenya. In order for the court to establish the correct monetary compensation.

This is justified by the fact that a man has a legal interest entitling him to complain if his life is abruptly brought to an end. Nathan Mwangi Kamau Transporters & 4 Others47 the court was of the view that. (2006). Thus damages for loss of life should not be calculated solely or even on the basis of the quantity of life that is lost. Law Africa at pg 13 High Court Civil Case No 1870 of 1984 47 [1986] KLR 457. In fatal accident claims. Measure of Damages for Bodily Injuries. According to this alternative basis. Vishra Ranji Halale & Another46 and Hassan vs.45 According to the judgement in the cases of Muka Stella F vs. According to Justice Richard Kuloba. and only to award damages for loss of prospective happiness: the thing to be valued is not the prospect of a predominantly happy life. The Kenyan courts thus consider the non pecuniary damages in regard to evidence. it is irrelevant to consider the number of years’ expectation. another basis of such an award is loss of expectation for happiness. the local courts have been invariably excluding the deceased’s living expenses in the lost years for the reason that they cannot constitute part of the deceased’s estate. This basis indeed downplays the objective cash valuation of the number of years of life of which the plaintiff has been deprived. However the assumption that all human life is full of expectation and its shortening often calls for compensation is always avoided. Damages for disfigurement. severity and time due to the aspect of interest and the inflationary trend.The per diem method of assessing damages as practised in the United States of America of compensating the plaintiff based on a certain amount of money representing every day that the plaintiff has to endure with the pain and suffering has been proposed to the Kenyan system. 45 46 R Kuloba. an award based on the aspect of loss of expectation for life is often awarded. However this system can yield enormous amounts in damages. (1982-1988) 1 KAR 946 16 .

while based upon the number of years during which the loss of earning power will last. the court will subtract the amount.impairment or loss of anatomical structure or body tissue vary considerably because the nature of the injuries also varies. burial and other costs are represented under this head. The medical. The figure so obtained is multiplied by a figure which. Sweet & Maxwell at 740 17 . In the case of lost earnings. if any which he can now earn annually. These expenses however must be incurred reasonably to improve the plaintiff’s condition after the accident. These two figures are ascertained according to the principles of certainty. (13 ed). The measure of reasonableness is however always a matter of fact and degree. From this.2 Pecuniary Damages These are the damages that involve the healing process. travelling. The plaintiff in recovering the costs incurred has to show that he did not pay more than was reasonable in the circumstances.48 So the standard method of quantifying the loss is to multiply the loss net average annual income (the multiplicand) by the number of years during which the loss will last (the multiplier).4. the court takes a figure of the annual earnings of the injured person at the time of the injury. 1. 48 Harvey MacGregor . MacGregor on damages. The court must also take into account other expenses incurred in the healing process that are capable of quantification and include them in the final figure for the special damages. is discounted so as to allow for the fact that a lump sum is being given now instead of periodical payments over the years.

Damages can then be awarded on a basis of either of the following modes of compensation which will be comprehensively covered in the main course of work. The attention of the authorities is drawn to the barren vacuum and impotence of a situation whereby a person who suffers serious and grave injuries is left without monetary redress because his claim fails for want of proof of negligence on the part of the driver causing the accident or the failure to trace him.3 The Way Forward The litigation process is very cumbersome and lengthy. due to the prevalence of the risk insured against.1. On the other hand.49Thus premiums under this principle vary. 18 . Some cases are dismissed on the basis of technicalities while others take as long as eight years to a decade.4. the only person that the insurance knows anything about. a quantitative monetary threshold which sets out a specific amount that must be set out to compensate an injured party or the qualitative verbal threshold which states what categories of injuries should be compensated. Aspects of contributory negligence also form part of the judgement stripping the plaintiff of half of the total damages in disregard of the legal costs. If a uniform premium rate is adopted for Public Service Vehicle 49 The information is retrieved from the insurance cover. liability insurance premium is adjusted according to the risk presented by the insured. In that regard the no-fault system should be introduced to pivot a balance between the interested parties in accident claims. Most injured persons suffer more loss than is actually awarded by the courts. It is thus necessary for the state to embark on a process of tuning the insurance industry in Kenya from the Fault melody to the No fault tune. under the road accident field. Liability or fault insurance tends to favour the insured and the insurer at the expense of the injured party.

These are the kind of inequalities created by the fault insurance compensation system and which by adopting the no fault system. Kinanu stated that. As opposed to the current liability insurance which considers the earnings-related principle50. the judge in essence only awards damages in accordance to the rates that he deems fit on his own estimation. With the earnings principle being used by our courts today. then the higher income groups draw much more out of the pool. The court in Tayab vs. is a tendentious way of putting the case. 2002). Atiyah’s Accident’s Compensation and the Law. that the plaintiff is entitled to be fully compensated for all the loss and detriment she has 50 51 Peter Cane. without necessarily putting back as much into the pool. we will be eliminating. the no fault system could be adequate for compensating victims either up to a certain amount or according to the categories of injury. In that regard. it puts the insurance company at a disadvantage when compensating a person whose earnings are beyond the scope of the premiums paid. ibid 19 . like this one may have been due to pardonable error such as may befall any one of us. Butterworths at page 127. In this regard. if all motor premiums for personal injury are seen as an insurance pool. The court stressed this so as to remove the misapprehension. when one is of the view that the defendants are wrongdoers thus should be made to pay in full. The accident.owners in Kenya. so often repeated. the no-fault system will protect both the insurance companies and the injured third parties. this system of estimating the future earnings of the deceased or injured person is not even subjected to any form of actuarial data. In some instances in my view. According to Peter cane51. (6th ed. the rates of inflation are exaggerated.

the fault principle leaves the injured party at a worse position than they were before the accident. civil Appeal number 29 of 1982. The defendants are not wrongdoers. It is therefore imperative to note that as much as the accident is not a wrongdoing on the part of the defendants. They are as lawyers say. She is only entitled to what is in the circumstances a fair compensation. Kinanu. fair both to her and to the defendants. more often than not. In this regard. That is not the law.suffered. 52 This assertion was made by the court in the case of Tayab vs. 20 . They are simply people who have to foot the bill.52 What is fair compensation may. be inadequate. She is entitled to full compensation for the harm suffered. only vicariously liable. the plaintiff is entitled to just more than fair compensation.

0 The Fault System of Insurance According to the Black’s Law Dictionary. the other has a liability. Principles of the law of contract. The term liability is one of at least double signification. If a duty rests upon a party.53 Liability or responsibility is the bond of necessity that exists between the wrongdoer and the remedy of the wrong. the term liability is the correlative of power and the opposite of immunity. the correlative of right. Jurisprudence. In this case society is not yet commanding performance. This vinculum juris is not one of mere duty or obligation. enforceable by civil remedy or criminal punishment. society is now commanding performance by him and threatening penalties. In one sense it is the synonym of duty. Accurate legal thinking is difficult when the fundamental terms have shifting senses. it pertains not to the sphere of ought but to that of must. in this sense it is the opposite of privilege or liberty.(1919) as quoted in Black’s Law Dictionary 54 Glanville L Williams (ed). but it will so command if the possessor of the power does some operative act. the term liability refers to the quality or state of being legally obligated or accountable. It would be wise to adopt the second sense exclusively. Grosser fault may even be seen as justifying the award of exemplary or 53 William R Anson & Arthur L Corbin(eds) . If one has a power.CHAPTER TWO 2. legal responsibility to another or to society. as quoted in Black’s Law Dictionary 21 . In a second sense. (1947 10th edition).54 The fault principle has traditionally been understood as a principle of morality which can justify not only the imposition of liability for death and personal injury but also the assessment of compensation according to the full compensation and hundred percent principles.

(1948). By compelling compensation the loss is merely shifted from 55 56 Supra fn 34 at page 144 Fleming James.punitive damages. It may be inferred that most of the serious accidents are seriously and undeniably culpable. the ultimate object or a sufficient justification of legal liability. It is simply the instrument by which the law fulfils its purpose of penal coercion. According to Salmond. many injured persons in this country walk out of a judgement uncompensated because they could not prove liability. Pecuniary compensation is not in itself. either civilly or criminally. He is punished by being compelled to make pecuniary compensation to the person injured. It is clear. and cannot be undone. When one man does harm to another without any intent to do so and without any negligence. ‘Accident liability reconsidered: the impact of liability insurance’. Yale Law Journal 549 at page 569. The damage done is not thereby in any degree diminished. It has been done. however. the ultimate purpose of the law in imposing liability on those who do harm to others is to prevent such harm by punishing the doer of it. unless he acted with a guilty mind.55 The doctrines of tort law are hoarse and buggy rules in an age of machinery. that it is useless to punish any person. 22 . A degree of fault on the part of someone justifies compensating the plaintiff for all the losses suffered provided the plaintiff was in no way personally at fault. such as driving while intoxicated or speeding. and they might well have gone to the scrap heap some time ago had not the tremendous growth of liability insurance and the progressive ingenuity of the companies made it possible to get some of the benefits of social insurance under or perhaps in spite of the rules.56 Once fault is established. there is in general no reason why he should be compelled to make compensation. In moral terms the fault principle suffers from serious defects and can be attacked on social and practical grounds. damages shall be given to the injured party. Yet.

whether objectively or subjectively judged. but it remains equally heavy. it is hard to see why it does not also follow that a plaintiff should be compensated whether or not there is fault at all. It is however imperative to understand that. In the case of Carmarthenshire County Council vs. As Peter Cane argues. as quoted in the J.57 The aspect of contributory negligence is often raised in tort cases especially in running down matters. down a lane. Cambridge Law Journal (1983) volume 42 part 1 58 [1955] AC 549 23 . and in general the only purpose so served is that of punishment for wrongful intent or negligence. unless some good purpose is to be served by changing its incidence.the shoulders of one man to those of another. it is only fair that the harm suffered be borne by the tortfeasor or his insurance company rather than be shared between the two. 1st edition at page 9. ‘Motor cars and the rule in Rylands VS Fletcher: A chapter of Accidents in the history of law & Motoring’.(1907).R Spenser. The fault system of insurance capitalises on negligence or the failure to take reasonable care. through a gate and onto a busy road where a lorry driver trying to avoid hitting the child crashed into a tree and was 57 Salmond on Torts. if the reason for adopting an objective standard of fault is that when the damage is done the plaintiff has been hurt and deserves to be compensated whether or not there has been subjective fault. Lewis58 a little girl was wandering out of a nursery school maintained by the defendants. between a tortfeasor and a totally innocent and wounded victim. Reason demands that a loss shall lie where it falls. There is no more reason why they should be insured against the inevitable accidents which result to them from the forces of nature independent of human actions altogether.

The Court of Appeal held that the child’s teacher was negligent in failing to keep a sufficient eye on him. Subsection 3 however provides that this section does not exclude or otherwise affect any defence which. in an action to which this section applies. would enable such an action to be brought after the end of the period of three years from the date on which the cause of action accrued.killed. As was stated in the English case of Lancashire Insurance Company versus Inland Revenue Commissioners59 Bruce J as he then was stated that an insurance against liability is a contract of indemnity and no obligation arises on the part of the insurers until the insured has suffered loss. 24 . on the other hand section 27 of the same Act provides that the plaintiff can succeed in an action for the extension of time if it is established that. they will be obliged to indemnify the assured for a similar amount. This case goes on to ascertain that it is indeed very hard to properly establish who was at fault in accident claims. The aspect of limitation must also be cleared for litigation to sail through. or the operation of any law which apart from this section. and in either case was a date not earlier than one year before the date on which the action was brought. Liability insurance is an agreement whereby in return for a 59 60 [1899] 1 Q. may be available by virtue of any written law other than section 4(2)(whether it is written law imposing a period of limitation or not) or by virtue of any rule of law or equity. that material facts relating to that cause of action were included facts of a decisive character which were at all times outside the knowledge (actual or constructive) of the plaintiff until a date which either was after the three year period prescribed for that cause of action or was not earlier than one year before the end of that period.B 353 The limitation of actions act states under section 4 (2) that an action founded on tort may not be brought after the end of three years from the date on which the action accrued. The other aspect that bars injured persons from seeking compensation is the aspect of limitation. Therefore instead of trying to ascertain who was at fault. but the House of Lords exonerated the teacher from liability while still holding that the county council was liable as it had failed to maintain a gate at the school.60 The insured can presumably sue the insurers for a declaration that they are liable under the policy and that on payment by the assured. the injured person should be compensated especially in motor accident claims where there is compulsory insurance cover for third party risks.

premium, the insurer agrees to indemnify the insured against a loss. The purpose of this type of insurance is to protect an insured against some contingency. The injured party has no direct claim against the insurer. There is also no question of the insurance company paying damages under the policy for the benefit of a claimant who cannot establish a claim in law against the insured.61

The insurance contract is governed by the ordinary doctrines of contracts. If obtained by fraud or misrepresentation, then the insurance company cannot be said to be liable. Indeed, insurance against liability to third parties in respect of personal injury is compulsory under the Insurance (Motor Vehicle Third Party Risks) Act. However in order for an injured party to recover under the Act, there has to be proof of legal liability. The insured must have been at fault. The extent of the cover must adequately involve Third Parties and it must also be valid.

In calculating the premiums payable, insurance companies calculate the number and size of claim, range of damages awarded, administrative costs and the insurers’ profit margin. In the event that the rules of awarding damages change without warning, this can upset the insurers’ calculations significantly. Due to such problems, insurers inherent in liability insurance may lead to the liquidation of an insurance company.62 The effect of an insurance company’s collapse are now dealt with under the policyholders compensation fund established by the insurance (Policyholder’s Compensation Fund) Regulations of 2004. The contributions to the fund are 0.25% of the premium payable by
61 62

Supra fn 34 at page 191 The collapse of Invesco insurance and United Insurance companies is a clear indication that insurance companies mainly dealing with motor insurance may collapse due to any of the foregoing factors.


the policyholder per insurance policy and a similar amount by the insurer.63 It is thus necessary to introduce a structured settlement to cater for the ills faced by the injured parties in proving negligence and in instances of liquidation. Liability insurance enables proceedings to be brought against the estate of a deceased tortfeasor.64

Thus, the main focus of liability insurance is the compensation of the injured victims rather than penalising tortfeasors. This is also reflected under the section 4 of the Insurance (Motor Vehicle Third Parties Risks) Act. The standard of care required in the law of negligence has been tightened up over the years partly as a response to the prevalence of liability insurance. It is noteworthy that it is based on tort law and the fact that the defendant is insured, the plaintiff should succeed. Tort law is, as discussed in the following section a system of rules and principles of personal responsibility for conduct and its responsibility for conduct and its consequences. Although tort law could not operate as effectively as it does as a form of compensation, its basis is personal responsibility, not the availability of insurance. The fact that liability insurance was available only tells us that the defendant could pay any damages awarded not that the defendant should be held liable to pay compensation.65


This provision has always caused controversy as both the insured person and the insurer contribute and maximum compensation is up to 100,000. Regulation 11 entitles third parties to sue and claim as they are entitled under the Insurance (Motor Vehicle Third Party Risks) Act by dint of section 15(1) (b). Regulation 14 mandates the Board of trustees within 15 days to issue a notice to all motor vehicle policy holders in respect to liabilities arising from the insolvent insurer to cancel all policies issued by the insurer. Subsection 2 states that any claim made after 15 days notice shall not be compensated. This provision shuts down most policyholders especially dealing with motor insurance creating a problem even for the Third Parties to access compensation. 64 This is provided for under section 2(1) of the Law Reform Act cap 26 of the laws of Kenya. 65 Supra fn 34 at page 204.


The fact that insurance companies take time to compensate should be an indication that the services offered are devoid of quality. If loss has occurred under a compulsory insurance policy then compensation under a structured policy should follow. The obligation of insurers and insured persons to handle tort settlements in good faith is a problem facing insurance based on fault. The insured has a right to take or defend the matter. Thus when the claim is within the policy limits and the company admits coverage, the insured assumes a secondary role and is more like a witness than a party.66 As stated in the case of Marginian vs. Allstate Insurance Company67 the court ruled that the insurer could settle the claims within the policy limits in the face of specific objection to the settlement by the insured and if a claim goes to trial, in most instances the lawyer for the defence will be selected and paid by the insurer. Thus, from the perspectives of everyone involved with the claim, the real defender of the case in most cases is the insurer.68 In most cases, the insurer in the event that it cannot of its own accord represent itself in court appoints an attorney who appears or handles the case on its behalf. Where the lawyer is appointed to represent the insured the lawyer owes primary loyalty to the insured. He owes the insured an undeviating and single allegiance. In most cases in Kenya an insured will be represented by an advocate while the plaintiff cannot afford one, yet compulsory insurance cover is provided for. This usually depicts an unfair contest in the quest to prove negligence. In cases where liability is based on fault, it is the injured party who normally bears the burden of proving that the insurer was at fault. This

66 67

Henderson Pearson Siliciano, “The Torts Process” (1994) 4th Edition, Aspen publishers 18 Ohio Street 3d 345, 481 N.E 2d 600 (1985) 68 In the case of Kairu vs. Lion of Kenya Insurance Company limited (1988) KLR. In this case the court dealt with the question of whether the Defendant was a proper defendant to sustain the suit. The court concluded that the defence was faulty because the defendants did not serve the plaintiff within the prescribed time.


rule about burden of proof is generally considered to be a corollary of the negative part of the fault principle, namely no liability (without proof) of fault.69

The doctrine of res ipsa loquitor which is invoked in most Kenyan cases provides an avenue for the shift of the burden of proof to the insured person indirectly. This doctrine approves in cases of injury caused in the instance of motor vehicle accidents by the exclusive fault of an identifiable person. Under circumstances which the accident could not have happened were it not for the negligence of that person, in such an instance therefore the defendant runs a risk of being held liable unless they give an explanation of how the accident might have occurred without negligence on their part.70

2.1 The Common Law Tort System The primary function of the law of tort is to define the circumstances in which a person whose interests are harmed by another may seek compensation. Once a duty situation has been established in tort, the question of whether there was a breach of that duty is an ultimate question the court has to deal with, according to the objective standards of the reasonable man. In this regard, several factors have to be considered, duty, cause, damage and reasonable foresight.71

In fault insurance matters, actions are of a civil nature. There has to be pleadings drafted but a demand letter must be sent to the defendant. The plaint must be accompanied by

69 70

Supra fn 34 at page 77 P.S Atiyah, ‘res ipsa loquitor in England & Australia’(1972) 35 Modern L.R 337 71 B.A Hepple & M.H Mathews, Hepple and Mathews Tort Cases & Materials (1974) Butterworths, London


damage to the plaintiff caused by that breach of duty. Kinanu75 the Appeal court held that in making a decision on contributory negligence of a child. 74 In Kenya. 73 There are instances however when the plaintiff is denied part or all of a damages award because of his/her own conduct. suffering and loss of amenities.72 Most aspects of proving fault based on negligence to get compensation often creates hardships in sensitive areas. the appellant alleged that she had taken all precaution to avoid hitting the girl and proof of 14 feet long brake marks made by the Appellants car 5 feet from the appellants near side of the road were established. a girl of 9 years sued for damages as a result of being struck down by the plaintiff.000 shillings. a duty to take care. first. This third element can be subdivided into two further elements. Considering the 72 73 Supra fn 34 at page 27 Such areas are instances where an ambulance causes an accident injuring various people while rushing a patient to hospital. 75 Civil Appeal number 29 of 1982 The facts of this case were the respondent. found her contributory liable and slashed the award to 300. the introduction of the Michuki rules has led to the finding of contributory negligence where the injured party has failed to belt up. the court should take into account the child’s ability to understand and appreciate the dangers of the road. Tort of negligence is the primary object of this section of this research work and it is based on the blameworthy nature of the defendants conduct which covers not only injury to the person but also financial loss. Contributory negligence usually attaches to the plaintiff’s failure to take reasonable care of ones own safety. that the defendant’s conduct must have been the ‘cause in fact’ of the damage. At trial. In this case the respondent was found to be in a position to understand this thus liability also attached to her. a breach of that duty and third. 29 . The trial judge however did not find the respondent contributory liable & awarded her 750. Second. The court of appeal overturned this decision. The Nyeri High Court in handling a case from Outspan Hospital involving an ambulance whose driver has been sued for causing an accident. The tort of negligence is said to consist of three essential elements.000 for pain.summons to enter appearance bearing the court seal and the date of first hearing.74 In the case of Tayab vs.

This is because the fact that the defendants are invariably insured against liability and denying injured parties’ compensation would be tantamount to benefiting insurance companies unduly. In my view. 30 . 2. having regard to all the circumstances of the case. the failure to proof Negligence often leads to the dismissal of most cases. 77 The provisions of order VII of the Civil Procedure Act provide that all case of a civil nature shall be brought to court through a plaint explaining the cause of action. This was in my view unfair to both the minor and her guardian. whichever is the later.2 The Litigation Process The litigation process is characterised by the burden of proof. It is imperative to understand that the defendant is insured while the plaintiff relies on the cover of the defendant in case an accident occurs. 76 Section 46 of the Traffic Act provides that Any person who causes the death of another by driving a motor vehicle on a road recklessly or at a speed or in a manner which is dangerous to the public. The introduction of a no-fault law would ensure that the premiums paid by insured persons would be utilised for the reasons that they are meant for. the aspect of contributory negligence is not useful in law especially in personal injuries cases. the contribution was 40%. shall be guilty of an offence whether or not the requirements of section 50 have been satisfied as regards that offence and liable to imprisonment for a term not exceeding ten years and the court shall exercise the power conferred by Part VIII of cancelling any driving licence or provisional driving licence held by the offender and declaring the offender disqualified for holding or obtaining a driving licence for a period of three years starting from the date of conviction or the end of any prison sentence imposed under this section. In the Kenyan situation.award by the trial court and the Court of Appeal. The burden of proof is on balance of probability. The traffic accident cases are brought both under the Traffic Act76 and the Civil Procedure Act77 for compensation. including the nature. compensation in case of occurrence of risk. condition and use of the road and the amount of traffic which is actually at the time or which might reasonably be expected to be on the road. or by leaving any vehicle on a road in such a position or manner or in such a condition as to be dangerous to the public. describing the parties and giving their addresses for purposes of service of summons which is expounded by the provisions of Order V.

Such an instance was seen in the case of Haji vs. where the witness is dead. Henkel Kenya Limited & Another78 Justice Angawa dismissed this case brought under the Law Reform & Fatal Accidents Act because the representative of the Estate of the deceased did not prove the issues before court as per order XVII rule 2(1) of the Civil Procedure Rules79 with regard to proof of ownership of the Motor Vehicle. 78 79 HCCC No 1566 of 1997 Order XVII rule 2(1) provides that. and the questions in issue were substantially the same in the first as in the second proceeding.80 The fact that a police officer was not called to take measurements of the skid marks on the road shows that no proof of fault was established. or is kept out of the way by the adverse party. in the case of a subsequent proceeding. 81 Section 34 of the Evidence Act provides that. Marair Freight Agencies Limited82 the Court of Appeal stated that it is the duty of the court to arrive at a finding of the facts however difficult the situation may be. or is incapable of giving evidence. Some judges exclude the evidence of crucial witnesses and rule purely on a speculative aspect. or cannot be found. and where. the quantum cannot be calculated. 80 Proof of ownership is done through search with the registrar of motor vehicles. the proceeding is between the same parties or their representatives in interest.In the case of Kangutuu Mbithi vs. in the following circumstances. and the adverse party in the first proceeding had the right and opportunity to cross-examine.81 Documentary evidence for proof of special damages and age is also requisite under these circumstances. or where his presence cannot be obtained without an amount of delay or expense which in the circumstances of the case the court considers unreasonable. evidence given by a witness in a judicial proceeding is admissible in a subsequent judicial proceeding or at a later stage in the same proceeding. the party having the right to begin shall state his case and produce his evidence in support of the issues which he is bound to prove. for the purpose of proving the facts which it states. 82 [1983] KLR at page 139 31 . if not produced. or on any other day to which the hearing is adjourned. on the day fixed for the hearing of the suit. Traffic cases in instances of fatal accidents are admissible as evidence in Running down civil matters by dint of section 34 of the Evidence Act chapter 80 of the laws of Kenya.

all influence the probability of accidents and therefore the number of accidents should appear in the frame of factors important in accident causation. defendants file counter claim disregarding the plaintiff’s averments.A 118. I am inclined to think that the position is different. there is a lack of evidence as opposed to a conflict of evidence. an irresistible inference of negligence on the part of both drivers. the quality of its surface. An important point to note here is that the difficulties of proof mean that the process of deciding what caused an accident and who was at fault is an extremely expensive and time consuming process in many cases. A. Where. I think that it is usually possible. as for example where vehicles collide near the middle of a wide. In fact it is these difficulties that make people abandon tort clams or make no claims at all. In other instances. The learned judge stated that I accept that a judge is under a duty when confronted by conflicting evidence to reach a decision on it. because if one was negligent in driving over the centre of the road. the other must have been negligent in failing to take evasive action. 120 Supra fn 34 at page 156 32 . I personally find it difficult to see how a party can be found guilty of negligence if there is no evidence that he was in fact negligent and if negligence on his part cannot be properly inferred from the circumstances of the accident. although often extremely difficult.G83 anytime there is a conflict of evidence. straight road in conditions of good visibility with no obstruction or other traffic affecting their courses. there is in the absence of any explanation. the flow of traffic and its speed. Ignoring normal aspects of 83 84 [1971]E.The Kenyan courts have developed the aspect of citing the case of Lakhamishi vs. however. its curvature or gradient. but I accept that where it is not possible it is proper to divide the blame equally between them. to apportion the degree of blame between two drivers both guilty of negligence. I accept that in relation to most traffic accidents it is possible on a balance of probability to conclude that one or other party was guilty or that both parties were guilty of negligence.84 A careful study of road accidents should be commenced and things such as the width of a street. I accept that in many cases.

where an injured person is in dire financial strain to save his life as a result of the accident. since it is usually possible to believe that there would have been no accident if someone had acted differently.85 In this regard therefore. if an injured person is seriously impaired. and he is ill to the knowledge of the insurers. 1963) 3-4 Accord and satisfaction is the purchase of a release from an obligation by means of valuable considering. then on the authority of the English case of D&C Builders vs. It is also important that 85 86 Research on Road safety( HMSO. not being the performance of the obligation itself. Independent legal advice and the state of health are crucial. it may be inferred that the acceptance of the payment is merely for the purposes of saving life before negotiations can proceed.B 617 88 Supra fn 25 at page 38 33 . It is important also to understand that what is reached to in an out of court settlement does not reflect on what the court could have arrived at.86 According to Richard Kuloba. It is trite law that true accord exists only where the injured person has. with full knowledge of his rights freely and voluntarily agreed to accept the one sum in discharge of all his claims. they must follow the rules of accord and satisfaction to the latter.88 In the process of replacing fault insurance with no fault insurance. The dynamics of the settlement process are very different from those in the court room. 87 [1966] 2 Q. Rees87 any discharge voucher signed under such circumstances is not a valid discharge. When an insurance company discharges a voucher. it is important to note that this could have serious implications on the legal profession. it is imperative to encourage out of court settlements instead of court litigation (which is very expensive). So.accident causation gives rise to a tendency to ascribe most accidents to human factors such as carelessness.

interests of the consumers according to Peter Cane and not the administrators must prevail. In this case then. The legal system refuses to acknowledge the presence of insurance is embedded in the doctrine of subrogation. 2. These tribunals should be the mandate of the Association of Kenyan Insurers (AKI) on the one hand. the legal profession and the government on the other hand to create a balance of interests. in the long run. Law is a social service and in the long run.proposals for reform should grasp this nettle. He adds that. The concern of lawyers cannot. special tribunals should be established to assist injured persons negotiate settlements. Standing in its clients shoes. “everyone knows that all prudent professional men carry insurance and the availability and cost of insurance must be a relevant factor”. The presence of insurance as espoused by Lord Griffith in Smith vs. The judge said that. the abolition of tort actions would clearly be a slow process with a long transition period because of the backlog of old cases waiting to be disposed off when the legislation takes effect. and not dismiss the problem with an airy reference to vested interests.3 The Influence of Insurance under the Fault System. Bush89 will influence the judge in making his decision. an insurer has a right to defend the claim or bring an action to recoup monies it is liable to pay out under a 89 [1990] 1 AC 34 . be allowed to determine the shape of the law relating to compensation for personal injuries. In introducing the no fault law and eliminating the cumbersome litigation process. insurance companies can be represented by lawyers in negotiation as well as injured persons with the mandate of conceding at a reasonable figure within a well structured no fault compensation scheme.

but it’s the primary medium for the payment of compensation. but that of its policyholder alone.policy. Crocker. policyholder’s cede control over their case to their insurance and thereafter usually play little or no part in the litigation process. (2005). This involvement in litigation via subrogation is accomplished by using not the name of the insurer itself. (1968).91 It has been argued that judges appear more ready to impose liability when insurance enables the cost of compensation to be more widely distributed. Road Accidents. In most cases. The discretion however has limits as expounded in the case of Groom vs. London Penguin. and tort law is a subsidiary part of the process. at least in situations where they have been less able to protect themselves by taking out their own first party insurance.94 Most insurers have developed highly systematized 90 91 R Eggleston.90 Celia wells & Derek Morgan have posed a question as to what the relationship between the law of tort on the one hand and the availability of insurance on the other.93 In most cases insurers determine how the defence is to be conducted and even make admissions without the consent of the insured. the wrong people were sued. Proof & probability. ‘Insurance and the Tort System’.92 Although the majority of defendants in tort are individual people. they are almost all insured. Evidence. In such instances some countries that have a jury system have refused to acknowledge liability of a defendant because according to him. The Journal of the Society of Legal Scholars 92 Supra fn 39 at page 191 93 DW Elliott & H Street.(1983) 2nd Edition at page 73 Celia Wells & Derek Morgan. There is no doubt that insurance profoundly influences the practical operation of the law of tort. Tort rules have been said to have been adopted in favour of claimants. Liability insurance is not merely an ancillary device to protect the insured. at page 209 94 [1939] 1 KB 194 35 . volume 25.

Although the greatest in need.95 Insurer’s influence upon settlements is even more pronounced than it is upon decided cases. For a lawyer asked by his client to advise on the merits of a claim it is the realities of the litigation system that are of the concern rather than the formal rules of law. they will find their high value claim scrutinised in detail and processed very differently from the average case which typically involves a minor upset and little if any financial loss. Simplification occurs because the rules are too uncertain when applied to the individual facts of particular accidents. Liberality is weighted in favour of insurers and results in much inequality. secondly they are made more liberal. According to Ross96 textbook rules on tort are often transformed when they come to be used in the system in three ways. They have increasing structured their business and closely monitor the performance of their claim handlers and lawyers. When accidents happen. they are made more equitable.97 Those who suffer most are the severely injured. (1980) New York. The eagerness of claimants and their lawyers to get something from the system reflected in the fact that they have been found to be very keen to accept the first formal offer made to them by the insurer. Economic pressures mean that communication between the parties takes place on the telephone rather than via letters or face to face meetings and the outcome of a claim is likely to be influenced as much by a computerized assessment as by the discretion of the claim handlers involved. they are simplified. Aldine publishing 97 ibid 36 . First. Settled out of the Court. Those seriously injured are much less likely to 95 96 Supra fn 125 HL Ross. Delay uncertainty and financial need and other pressures cause claimants to accept sums much lower than a judge would award. and there is neither time nor resources to instruct experts to analyse each scene of accident and precisely measure its effect upon the individual claimant.

In Morris vs. The fund is better able to bear it than he can. the damages are expected to be borne by the insurers. Taking the facts seriously. unless he can prove care and skill of a high standard. the learner driver is not at fault. The courts themselves recognise this everyday. but should be compensated out of the insurance fund. Thus we are moving away from the concept no liability without fault. which.receive full compensation than those suffering minor injuries.(1996). Most injured parties cannot recover damages due to want of proof of negligence or inability to trace the driver. are likely to be over compensated. for a variety of reasons. In the fault system Kenya has adopted. Oxford press at pg 19 ibid 100 [1971] 2 QB 691 at 699 101 [1973] QB 792 at 798 37 . The reason is so that a person injured by a motor car should not be left to bear the loss on his own. But the injured person is only able to recover if the driver is liable in law. not by man himself. Ford Motor Company limited101. They would not find negligence so readily or award sums of such increasing magnitude expect on the footing that damages are to be borne. “on who should the risk fall?” morally. there is no possibility of this happening. In Nettleship vs.4 The Place of The Injured Party Under The Fault System Among the most important questions arising in this paper is whether and to what extent the injured party can recover directly against the assured. but by an insurance company.98 The overall result of the settlement system is that rough and ready justice is dispensed much influenced by insurance company personnel and procedures and driven by the needs of the insurance industry. parliament requires every driver to be insured against third party risks.99 Road Accidents predominate because that is an area where tort insurance is compulsory. he continued that. but legally she is liable to be because she is insured and the risk should fall on her. 2. therefore the state should devise a Motor and Industrial Insurers’ Bureau to compensate such unfortunate victims. Exploring the domain of accident law. 98 99 D Duff. So the judges see to it that he is liable. Weston100 Lord Denning stated that. We are beginning to apply the test.

lacerations on the face and a lifetime of discomfort.In their benevolent outlook for the welfare of society. At trial.” One of the cases that show the magnitude with which such legislation is necessary is the case of Kiki Papacharalampous vs. ‘I must leave this appalling case like this. the police inspector explained the scene of accident and provided that no brake marks were found there. our parliament could legislate for the establishment of a Motor Insurers’ Bureau to provide. Robert Ouko denied ownership and was not probed further. already owes the enactment of such novel and bold social legislation to the nation to give the people a new social deal for their welfare.102 As was so magnificently presented by Madan J in the case of Karanja Kago vs. I shall ask Supra fn 25 at page 28 Civil Appeal Number 1 of 1979(unreported) 104 Civil Suit number 1333 of 1981(unreported) 105 The facts of this case were that. for the payment of compensation in cases where there is no insurance or effective insurance covering the driver of the vehicle involved in an accident of which our ‘matatus’ were until recently a sorrowful and dejecting example. she was so injured she could not recall the happenings at the scene of accident and the police had lost their records. She did not see the vehicle coming and she was surprised that the vehicle could have been driven so fast in the circumstances. The insurers were also unknown. the plaintiff was crossing the road at a round about on Wabera Street when she was hit by a speeding matatu. The plaintiff sued the owners of the vehicle Robert Ouko and Stanley Mariga as well as James Ogot Ogwang said to have been the driver of the motor vehicle at the time of accident. we will have juridically bejeweled Africa.105 The court at trial could only say and conclude. When that happens. Kariuki James Mungai.103 “parliament whose wisdom is unlimited. Robert Ouko & Others104 where the plaintiff was left with a fracture to the pelvic bone. it was not established what happened or who was vicariously liable. Mariga admitted ownership but denied having employed Ogwang as the driver of the said motor vehicle. In the circumstances. notwithstanding and in addition to the requirements of compulsory insurance against third party risks. However. 103 102 38 . The plaint was dismissed with costs and all the judge could hope for was that the defendants would settle at a reasonable figure as costs.

This is a sad state of affairs and the law should be reformed. We have been asking for this since 1976’. 39 . This shows that the injured person has no easy time claiming redress for injuries suffered as a result of an accident for which the defendant is insured.that it be sent to the Attorney General to consider whether steps should be taken to preserve police inquiries.

CHAPTER THREE 3. loss or damage. This system is used to describe any type of insurance contract under which insured persons are indemnified for losses by their own insurance company. at page 1 40 .[1982]. Foxton Cambridge. ‘What next in the law’. a cultural mirror that reflects the morals of society. To require an injured person to prove fault results in the gravest.106 One of the basic and inescapable requirements of every civilized community is the duty which every member of that community has to conduct himself and his activities in such a way as not to interfere with or damage the person. The no-fault system on the other hand is an administrative remedy that is largely devoid of a moral content. that the person who uses this dangerous instrument on the roads-dealing death and destruction all round should be liable to make compensation to anyone who is killed or injured by consequence of the use of it. usually in terms of money. the person who has in consequence suffered injuries. [1988] Burlington press. injustice to many innocent persons who have not the wherewithal to prove it. in the present state of motor traffic. regardless of fault in the incident generating 106 107 Lord Denning. Insurances of liability.107 The fault insurance is always said to be a social symbol. Cambridge Law Journal. as a matter of principle. property or rights of any other member of that community. It focuses on the party at fault. any civilized system of the law should require.0 The No-Fault System of Insurance It was the view of Lord Denning that. If he fails in the observance of this duty. at page 81 Collin Smith. There should be liability without proof of fault. the rules of the community invariably provide that he becomes liable to compensate.

losses. They are also restricted in the right to seek recovery through the civil justice system for losses caused by other parties. The reduction of premiums depends on some combination of lowering claims processing costs and lowering the level of motorist’s actual liability.dimensions and proposed Solution’ (1968) 110 Walter J Blum & Harry Kalven.110 Jerry J Phillips & Stephen Chippendale. the no fault system offers faster settlement of damages and is more efficient as it avoids delays. while providing quick payments for injuries. the dominant political rhetoric was to promise virtually all motorists an actual reduction in premiums. better care for the accident victims. expenses in litigation and uncertainty. (2007). better values for the insurance dollar. seriously injured victims are collecting nothing from the insurance industry and most are getting inadequate compensation after several years of attending court hearing. the no fault system really does deliver as promised. Unlike the current insurance regime in Kenya where an injured party has to file a suit to recover damages in regard of a motor accident. In Kenya for example. faster payment of claims and sharply reduced legal and administrative costs. University of Chicago Law Review. at page 641 108 41 . According to Aponte and Denenberg. ‘The automobile problem in Puerto Rico. Thus the policyholders or the injured parties are compensated by the insurance companies without proof of fault. George Town University Press 109 Aponte and Denenberg.109 When the fault system was being introduced in America. Who pays for car accidents. The main goal of the no-fault insurance is that of lowering premiums costs by avoiding expensive litigation over the causes of accidents.108 The no-fault system provides for prompt payment to accident victims regardless of how the accident happened or who was at fault. ‘Public Law Perspectives on a private law problem’[1964].

the principle difference between no fault and tort liability is that no fault attempts to compensate a greater number of individuals based on the occurrence of injury rather than on fault. ‘A comparative Economic analysis of Tort Liability & No-fault compensation systems in automobile insurance’.(1983). A no-fault system ensures that injured persons receives more compensation than they would were they allowed simply to sue the wrongdoer. Some states however find it imperative to 111 112 See Report of the committee on absolute liability. loss of wages.(1963). compensation for loss of services. Wellington New Zealand Robert C Witt & Jorge Urrutia. Under the conditions of modern traffic an accident is an accident and the real responsibility rests on society.According to the New Zealand Committee on absolute liability. In my view. Just as society has had the benefits of modern transport. any attempt to improve a system of compensation based on tort. viewing the matter as a social question and not as a legal contest. A new approach is needed. It is better both from the social and the individual point of view that everyone suffering loss by road accident should be compensated than that compensation depend on the chance that a motorist can be made legally accountable. However the most common benefits are medical costs. so it should provide for the harm that it causes. The no fault insurance comes under different parts such as Personal Injury Protection or Optional Basic Economic Loss.111 In order to meet the social problem of misfortune which follows accident the whole basis of the present system should be reviewed. It would be cheaper to get rid of the tort system rather than modify it.112Philosophically and practically. The problem calls for compensation for misfortune rather than damages for an individual wrong. funeral and death expenses. despite our best endeavours will remain a permanent feature of life. while tort will likely compensate a smaller number of individuals since not all persons’ accidents are caused by the fault of another.113 No fault insurance is used to describe any auto-insurance system that both require drivers to carry insurance for their own protection and that places limitations on their ability to sue other drivers for damages. would not cure all the ills that come with the tort system. Government printers. facing the fact that the toll of the roads.The Journal of Risk & Insurance 113 Supra fn 79 42 .

and may from time to time revise the highway code by revoking. Almost every instance of motorist negligence violates some provision in that code. but any such failure may in any proceedings (whether civil or criminal. motorist behaviour is covered in an almost comprehensive way by the states highway code. Advantages and problems’ (1991) See last accessed on 20th December 2008 115 Part VI of the Traffic Act (cap 403) of the Laws of Kenya makes provisions for the regulation of traffic. Carroll & James S.115 The Traffic Rules under section 119 of the Traffic Act also highlights various driving requirements governing motor vehicle operators.117 Gary T Schwartz. Kakalik. Sub section three states that. the Highway Code and any alterations proposed to be made in the provisions thereof shall be laid before the National Assembly. such code shall be deemed to be revoked or previously done or suffered by virtue thereof. and including proceedings for an offence under this Act) be relied upon by any party to the proceedings as tending to establish or to negative any liability which is in question in those proceedings. In no other sector of tort law is there such an extensive system of public regulation paralleling the tort system.116 The adoption of a no fault system of insurance does not prejudice anyone as both motorists and passengers before the occurrence of any accident are potential plaintiffs and defendants of any accident.combine the fault insurance with the no fault insurance due to compensation standard for severity. 116 Stephen J. and hence exposes the negligent motorist to public law penalties. First. amending or adding to the provisions thereof in such manner as he thinks fit. varying. (1991) No fault Automobile insurance: A policy Perspective 117 Supra note 81 114 43 . ‘Auto no-fault and First Party Insurance. and. it is worthy to note that the motor industry has distinguishing features from other sectors still regulated by the tort system. Section 68 states that. a failure on the part of any person to observe any provisions of the highway code shall not of itself render that person liable to criminal proceedings of any kind. Sub section 2 continues that. if a resolution of the National Assembly is passed within thirty days of their being so laid that such code be revoked or amended in accordance with such resolution. Thus possible tort reforms such as limitation on damages recovery detriment both potential plaintiffs and benefit potential defendants. the Minister shall prepare a code comprising such directions as appear to him to be proper for the guidance of persons using roads.114 In distinguishing the fault and no fault system.lawteacher.

even the private insurance companies which lost an important part of the insurance market. a motorist.The no fault system can be categorised as either pure no fault. Manitoba and Saskatchewan. without regard to fault. The victim’s non economic pain and suffering is ignored. Additionally. 119 118 44 .119 The Kenyan economy is quite different from Canada or Israel. Crossroads (Auto Accident Compensation Project). hybrid or choice. the victim’s recovery for economic losses. Economic loss in countries where a large part of the population earns a lot of money must be in favour of the pure no-fault system. nobody in Quebec wants to go back to the old tort system. (1998). a structured compensation law should be adopted laying value on various injuries either based on a specific amount set to compensate an injured party or upon a category of injuries to be compensated. Canadian provinces such as Quebec. A whole different world next door’. his passengers or even a pedestrian who suffers injuries recovers automatically. In that regard.118 In my view. The loss occurring from this pain and suffering is always a key element when suing for damages. ‘Quebec Automobile no-fault system. The pure no fault system is however in effect in developed countries such as Israel. ibid According to Daniel Gardner. Most motor accident victims in Kenya suffer more pain and other bodily injuries. Under this system. the pure no-fault system is not practical in the Kenyan insurance regime due to the limitation of economic losses. medical expenses and income interruption can be for very large or perhaps unlimited amounts. the purchase of the no fault insurance is compulsory. In a pure no fault system of insurance. unlike a developing country where most people live below a dollar a day. But recovery is limited to economic losses.

Above that amount. The specified amount for economic losses and the threshold for pain and suffering must maintain a balance. Recovery for pain and suffering is also covered up to a certain threshold. If the victim’s injury exceeds the threshold.On the other hand. then the victim is able to bring a tort claim against the negligent motorist for pain and suffering. However.121 The hybrid system would be practicable in Kenya with slight modifications. It would cater for economic losses up to a certain amount with persons whose claims are above the threshold suing for recovery under the normal tort process. (1985) 122 Supra fn 36 at page 416 121 120 45 . and secondly. compensating Auto Accident Victims: A follow up report on nofault Auto insurance experiences. This system also saves on the costs of referring a suit to court. compensation is sought through a law suit. they subject to the defects of the tort system the most in need.120 In my view. they require the retention of the apparatus of Third Party liability insurance mechanism. This second disadvantage appears even more significant when it is recalled that the tort system tends to overcompensate in minor cases and to under compensate in serious cases. Moreover whenever an accident produces an injury that is below the amount prescribed for economic loss eliminates the motorists’ liability for it. a hybrid no fault system ensures that substantial compensation for an economic loss is guaranteed to persons who ordinarily would not recover under the tort system. the seriously disabled.122 The determination of suitable compensation should a no fault system be adopted in Kenya would be governed by a ibid United States Department of Transport. a hybrid of no fault and fault insurance ensures that the victim who suffers economic losses recovers up to a certain amount. the hybrid system suffers two major disadvantages.

123 According to Keeton and O’Connell. This premise itself can be seen as resting on either a liberal. 123 46 . or on a theme of horizontal equity pursuant to which people with equivalent needs should receive equivalent benefits or in economic notions concerning efficient insurance. at page 793 124 Robert E Keeton & Jeffrey O’Connell. a thicket of common law doctrines that can bar a victim’s recovery.special tribunal composed of representatives from the Association of Kenyan Insurers. humane concern for cushioning the consequences of hardship. In Kenya however. even when another motorist has driven negligently include contributory negligence. the laws in place cover the whole jurisdiction with no option of choice whatsoever. immunities. Uniform laws are legislated by parliament to govern every citizen with no disparity whatsoever. In Kenya for example. (1998) Miami Law Review. (1965) Basic protection for the traffic victim: A blueprint for reforming automobile insurance. The choice no fault system is only applicable in countries that have both the fault and no fault insurance in different states such as the United States of America. 3.124 The tort system provides compensation as both general and special damages. ‘No fault Drives Again: A contemporary Primer’. Motorists are allowed to choose which system to apply for compensation. the legal fraternity and the government. an award of general damages is awarded in consideration to previous awards Mark M Hager. limitation of actions and proof of negligence.1 Victim Compensation Under No-Fault Insurance No fault rests on the premise that all auto accident victims should be compensated for their economic losses.

the state would only intervene in determining the compensation guidelines and appointing representatives to sit at a special tribunal established for determining suitable amounts within a structured compensation system. drawn from the premiums paid by the insured persons every year.126 No fault law concentrates on the injuries rather than on the way the injuries were caused. According to the most thoroughgoing version of this approach. amounts 126 125 47 . This would thus cater for the compensation of injured persons from motor accidents occurring within that year. As a personal injury compensation mechanism. Disease and the compensation debate. medical fees or taxes. A special body would also be established for the supervision of the common fund128 from which the compensation This was expressed in Jabane vs. regardless of the source or nature of the disabilities. Stapleton. Oxford Press. at page 158 128 This common fund would be a compulsory contribution from all the Third Party Motor Insurers. Olenja (1986) KLR at page 2 Supra fn 39 at page 399 127 J. (1986). However in case of a deficit. the tort process of making a claim adds salt to injury and the impact of liability insurance drastically reduces the potential impact of the tort process on individual process. inflation and for the sake of those who have to pay insurance premiums.125 Various moves should be made by the government to reduce delays in the court system and to take pressure off courts by encouraging use of Alternative Dispute Resolution (ADR) mechanisms such as arbitration and mediation. the awards should not be excessive. all those who suffer disabilities for which society accepts responsibility should receive financial and other support from the state according to the same criteria of need.127 In the event that the no fault compensation scheme is adopted in Kenya.for similar injuries. The most radical type of reform of the law concerning compensation for personal injuries involves abolishing the tort system entirely and incorporating no fault security system.

There is therefore certainty that the plaintiff will get something as recovery. and in the process they from premiums other than those of a given year can be drawn to fill in depending on the level of demand for compensation. In Queen Victoria’s reign. Victoria 3800 Australia See http://www. 129 Toby Hand field. then. it is unlikely that one which did so would be sufficiently efficient to be attractive. the judges began as never before to consider the basic ingredients of the individual torts. In general. the Judges in Holmes vs. Clayton. Mather130 held that the defendant in a running down case is not last accessed on 20th December 2008 130 (1875) 10 Ex 261 48 . As a result. and in particular whether or not fault was required in the defendant. is the benefit that one need not prove who was at fault under a no fault scheme. if the accident was not his fault. even in trespass. Compensation afforded by participation in a no fault scheme would not be any less adequate than that afforded by participation in a system of tort law. plaintiffs can expect to receive fewer damages for negligent harms under a no fault scheme than they would if successful in their suit under a system of tort. This is acceptable as less money will be spent on lawyers’ fees.lawteacher. as occurs in tort based systems.would be drawn. however. a series of important procedural reforms took place which shifted the emphasis of legal discussion from matters of form to questions of substance. The funds may also be invested to raise value and work against the inflationary trend. Journal of Applied philosophy. 3.129 Against that. Monash University. and private investigators and other costs incurred in the process of determining negligence and extent of damages. Some people have argued that replacing the tort liability system with no fault would be tantamount to denying the victims their right to sue for a wrongdoing.2 Adopting the no-fault system. While there could be no fault schemes which much are closely resembled a tort-based system of assessing damages. judges’ salaries. the English attempt In 1875.

what is the liability of the motorist whose machine causes damage without negligence on his part? Is the motor-car an honorary horse and cart.P 283 131 49 . Fletcher134.Cambridge Law Journal.R Spenser. volume 42 part 1. In this case. They said that the owner of a car is strictly liable for all damage which it does.G. but need not if you were not at fault. the courts had to face the vital question. In the same year. they added even if the plaintiff had been a pedestrian injured on the highway rather than a passenger in the bus.O.131 In the 19th century.O. confronted in Parker vs. Two distinct theories about tortuous liability emerged. and rejected the arguments based on Rylands vs. another motor bus had skidded without negligence on the driver’s part and a passenger had suffered personal injury. the driver of which is liable only if negligent. The other theory was that irrespective of fault. The court held that the passenger would not recover damages unless the driver was negligent. L.C135 with a J. but no one in their right mind could say that a motor bus was sufficiently dangerous to fall within the rule. at page 66 132 Ibid at page 71 133 (1909) 2 K.L 330 135 [1909] 73 J. The first was the obvious notion that you must pay if you are at fault. you must pay if you cause damage in the course of conducting an activity for your own profit which involves an inevitable risk of damage to others. (1983). The Rylands vs.C133 completely rejected the strict liability approach. L. or is it a notional traction engine towing strict liability behind it?132 The judges answered in the affirmative. The answer could have been the same. the divisional court. Fletcher doctrine they said could in theory apply to dangerous things on the highway.R 3 H. However in 1909.generalized about the basis upon which tortuous liability is imposed. whether or not he is negligent. Fletcher: A chapter of Accidents in the History of the Law & Motoring’.G. ‘Motor cars and the rule in Rylands vs. the court of appeal in Wing vs.B 652 134 [1868] 1 L.

They argued that the scheme would raise insurance costs. also held that the action must fail in the absence of proof of negligence.skidding motor-bus which had run into a pedestrian. 138 Supra fn 151 at page 82 139 Reports by the select committee of the House of Lords on the Roads traffic(Compensation for Accidents) Bill and the Road(Emergency Treatment) Bill. if slight.S. It would have been contrary to the principle of common law. contrary to the principle laid down in Supra fn 151 at page 73 Lord Danesfort was a fellow of Trinity College. These two cases put the law relating to motor accidents squarely upon the basis of fault liability upon which it has rested ever since.M. pedestrians would throw themselves under the wheels of passing cars and so. It would increase accidents because if they could always sue. Cambridge and a conservative member of parliament for York. reported in its favour. This would have made the owner strictly liable for all personal injury and death caused by the use of his motor vehicle on the highway to any other road user not himself driving or riding in a motor vehicle. England has had two attempts to import the no fault law. make motoring prohibitively expensive and so wreck the motor industry.O (1933) 137 136 50 . it would encourage a man who is at the moment the most dangerous road user and the cause of most accidents. if serious. He was also well known Tory peer with a gift for unsuccessful causes. the pedal cyclist. a ground for reducing damages only. The first and most serious attempt was Lord Danesfort’s137 Road Traffic (Compensation for Accidents) Bill which was before the House of Lords between 1932 and 1934. H.139 The motoring organizations opposed it as they had earlier opposed number plates for cars.138 The bill was supported in the house and a select committee which thoroughly examined it. The victim’s contributory negligence was to be a total defence. speed limits and compulsory Third Party Insurance.136 After the law was squarely established upon the fault basis.

142 However the government put it on hold until a finding by the Pearson Commission. the Pearson commission’s recommendation is a question of political goodwill. and as each year goes by. even one based on a rule of strict liability. According to them. printed as 1976 Bill number 41 51 . such a scheme would obviously have advantages over a claim of tort. Under the Pearson scheme. 140 141 Supra fn 151 at page 83 A solicitor and member of parliament for Crosby 142 Road Accident (Compensation) Bill. it was a naked attempt to soak the rich to subsidise the poor. the Pearson scheme has not been enacted. Mr. The commission recommended not strict liability for motor vehicles but a state run “no fault” compensation for traffic accidents financed by taxes raised on motorists. Unfortunately.140 In 1975. the whole proposal was tainted because it was motivated not so much for the purpose of protecting pedestrians but as an act of vindictive spite against motorists. They alleged that it was an attempt to introduce sinister continental practices whereby citizens are held guilty unless they prove their innocence. whose business is to avoid paying. Graham Page141 introduced a similar bill in the House of Commons. the plaintiff would get money with ease from a government whose business is to pay. The difficult of implementing. however. which will also be a great concern in Kenya if such a bill were to be introduced to parliament. instead of with difficulty from a defendant’s insurance company.English courts and against the principle of elementary justice. it looks never likely to be. From the plaintiff’s point of view.

3. New Zealand was the first to introduce or establish a fully fledged no fault accident compensation scheme.3 An Analysis of the New Zealand No-Fault Law The New Zealand citizens are proud of their innovations and their trials of what had been tried nowhere else. ‘New Zealand’s No-fault compensation scheme: 12 years on’. As such.(1913) Ron Paterson. humane and a thorough reasonable way of doing things. The dependants of a deceased person recover for lost earnings. its main purpose145 was to promote safety and occupational safety.143 Under the New Zealand no-fault system every beneficiary apart from non earning children and housewives contribute. However the major benefits of available under the accident compensation scheme are. earnings related compensation is up to 80% of lost earnings. April 1987. ‘Democracy in New Zealand’.146 As a result of the key elements of this Act. it is regarded as sensible. While being of considerable interest to lawyers. . As at the time the Act was being introduced. Artificial limbs or aids lost at the time of 143 144 Andre Siegfried. the scheme is not accepted as being simply another facet of the social security system which has been in place for over half a decade in New Zealand. and to believe that they are giving them lessons. the insurance industry and trade unionists at the time of enactment. 145 As set out under section 26 of the New Zealand Accident Compensation Act of 1982 146 supra fn 100 52 . action for damages in tort is removed. Vol 13 number 2. to facilitate adequate compensation for personal injury for persons who suffer by accident and defendants of persons where the injury results to death.144 New Zealand introduced the Accident Compensation Act of 1982 to repeal the Accident Compensation Act of 1972. Other hospitals offer affordable costs treatment. doctors. Treatment in public hospitals is free for everyone in New Zealand. Commonwealth Law Bulletin. they enjoy being able to smile at the timidity of the old countries. to promote the rehabilitation of accident victims. Sweet and Maxwell.

708 1. 974 claims were received only 11.991 2. The effectiveness of the no fault system in New Zealand can be evaluated by the number of claims between 1980 to1985 and the number of claims received compared to those declined within that period as illustrated below.148 147 148 Supra fn 100 at page 685 ibid 53 . Earnings related payments are made weekly. simple calculations conclude that. the average of time lag between receipt of a claim and a cheque being posted to the claimant is about 10 days.005 1.3% of the total number of claims which is minimal thus depicting that the system has been effective.147 YEAR 1980 1981 1982 1983 1984 1985 CLAIMS RECEIVED 126.168 1.106 CLAIMS DECLINED 3.391 128.254 were declined.916 144.515 153.157 1.787 131.259 159. a total of 843. the number of claims declined only make up a total of 1.225 From the above information.accident are also replaced. Compensation is also accorded to any person who can prove reasonable expenses or losses incurred in helping an accident victim. The system is speedy.

151 The no fault compensation in New Zealand is operated by the Accident Compensation Corporation which employs safety consultants in head and regional offices and conducts a number of safety training courses each year. community responsibility. Wellington. comprehensive entitlement.3. opposition from the insurance industry and the legal profession was not sufficient to do more than affect detail rather than substance. 1967 (The Woodhouse Report) 151 Ibid at page 687 54 . The guiding principles of the scheme derive their origin from the recommendations of the Woodhouse commission. real compensation and administrative efficiency.3.1 The genesis of the New Zealand no-fault law Dissatisfaction with the jury trial in road accident cases was expressed at New Zealand’s fifth dominion legal conference as early as 1938.149 The initiative for change in New Zealand came from lawyers. The corporation was formed in 1974 to administer a 149 150 ibid Compensation for Personal Injury in New Zealand. when a remit was passed approving the principle of absolute liability for personal in juries in motor accident collision cases with damages to be assessed in some suitable manner. “The toll of personal injury is one of the disastrous incidents of social progress. complete rehabilitation. It also enhances referral of accident victims for rehabilitation assistance. The woodhouse report provided that. and statistically inevitable victims are entitled to receive a coordinated response from the nation as a whole”150 In relation to the obstacles met in formulating this legislation. These were set out as. New Zealand. Government printers.

The premiums that employers pay are riskadjusted according to the risks associated with the industry they are in. a patient receives more prompt treatment if he or she has suffered the misfortune of an accident rather than an illness. there were reforms restricting the coverage for cases of mental injury unless attendant upon a physical injury or suffered as a result of being the victim of certain crimes mainly sexual offenses. ‘compensation for personal injury in new Zealand. Despite its growing importance in financing.2 Reforms made to the New Zealand no-fault law In 1992. state owned enterprise. motor vehicle owners/ users and general taxation revenues. Campbell.3. health care. the Accident Compensation Corporation pays for medical services for accident victims. The growing waiting times for public surgery. Auckland University Press. Thus.153 There was also a debate to reintroduce the right to sue in insurance claims. The managing director of the Accident Compensation Corporation suggested that the Accident Compensation Corporation should be turned into a fully funded. although consistent with the attitudes of a protected I.major public accident insurance fund designed to remove the risk of personal liability due to accident. the no fault accident compensation scheme has different goals and constraints than the balance of the public health care system and the dichotomy results in both unfairness and perverse incentives. earners. Auckland 153 Ibid at page 4 152 55 .152 The corporation derives its sources from employers. its rise and fall’ (1996). 3. and the high cost of reimbursing lost earnings whilst accident victims were waiting for treatment resulted in the Accident Compensation Corporation increasingly buying services from private hospitals in order to treat accident victims more quickly so as to get back to work.

It is a travesty that our venerable common law rights were forsaken for such an extravagant yet manifestly unjust excursion into the realms of social engineering. University of Hawaii Law Review 154 56 .154 3. on almost all counts. (1996). There has also been a battle over the abolition of the New Zealand no fault compensation scheme. the meanness of the benefits conferred bears absolutely no resemblance to the principles of compensation. More than 20 years have elapsed since New Zealanders were duped into accepting the 'no fault' accident compensation scheme. the negligent doctor or the reckless driver.3.monopolist. they are in no way financially accountable for their actions.(1993). ‘New Zealand no-fault regime’.3 Short-comings of the introduction of the no-fault law in New Zealand The abolition of the common law rights and a refusal to investigate how tort law could be improved to efficiently cater for injured persons. deterrence and education for all and insurance. the no-fault mentality has been no deterrent to the negligent. the railways.155 What was basically wrong was the operation of the insurance market which was plagued by government intervention. which is the means of relief for medical costs and loss of earning and selling the case for mandatory insurance on the unbalanced assessment of the weakness of tort and the proposition that the savings in the costs of legal remedies would offset the loss of freedom to sue and the choice of insurer. The negligent are shielded behind the canopy of the Accident Rehabilitation and Compensation Insurance Corporation.if only because of the propaganda expounded in its favour. However. the courts decided the awards were placed in the hopeless position of being unable Roger Kerr. Unquestionably. Mixed reactions suggest that. as mutually exclusive of the systems of tort. Costs have continued to escalate rapidly and now consume a considerable proportion of the nation's wealth. The misrepresentation. Initially. ‘New Zealand’s Accident Compensation Scheme’. it has proved to be an abysmal failure. Under the fault scheme that was in place. indeed. the new scheme may have appeared attractive enough . with its values of fairness and justice and its goals of punishment for negligence. comforted in the knowledge that ordinarily no action for damages in respect of personal injury or death may be entertained in any court. Whether it be the Department of Conservation. New Zealand Business Roundtable 155 Sir Geoffrey Palmer. Vol 15 Number 2. quite the reverse. On the other hand.

The injury victims themselves fill out subsequent forms requesting compensation from the offices of the Accident Compensation Corporation. at page 91 157 156 57 . but neither they nor the lawyers involved can hope for a windfall. ‘New Zealand’s no fault Accident Compensation scheme has some unintended consequences.S reformers. In any alleged accident situation. (1993). Lawyers who work with accident victims earn their livings on volume. however the recipients are dissatisfied with their disability compensation. The victims are cared for and compensated. they may need professional help. and any lawyers involved are entitled to compensation for their time. Instead of reforming both the legal regime and the insurance market. it is the doctor who decides if it was an injury by accident and if the injured person is entitled to benefits.4 The no-fault system’s impact on the legal profession Lawyers play only a small part in obtaining compensation for injury victims. Vol 27 Number 1.157 ibid Ellen K control either their claims costs or their income. They replaced them with a wall to wall no fault regime and a state monopoly insurer. They cannot earn a big fee on any one case. The International Lawyer. Doctors and lawyers fill out the initial forms. If.3. there is no big pay off. lawyers may prove useful in helping those injured explain their situation to the system. they can have a reasonable and steady income. The only people who made money were the lawyers. The results under this system are not a gamble. Then. the woodhouse commission went down precisely wrong track and abolished both. but if they process a sufficient number efficiently.156 3. a caution to the U.

159 Supra fn 113 160 This was the time it took to finish processing the personal injury tort cases that had been filed prior to the effective date of the Accident Compensation Statute 161 Royal Commission of Inquiry. most people feel that prompt payment for personal injuries was the same as protection of personal integrity. indifference or neglect are compensated. Persons who are not satisfied with the awards can appeal before and after. The lawyers also pointed out that during the time the scheme was being introduced. The appeals are directed to an accident compensation appeal authority judge. Earnings related claims are settled within 6 days of receipt. with no burden placed on the wrongdoer showed the disregard of many to a system that did not consider deterrence and punishment. However. Some appeals are successful without legal help but half of all the appellants have representation of some sort.160 The lawyers also pointed out that they had long prior notice to the introduction of the no fault scheme161 through public discussions as early as 1967. since poverty can generally be equated with the denial of individual rights. The Accident Compensation Corporation encourages injured persons to make their applications for compensation without professional help.162 Some moved to the bench as judges. there were other changes to the economy and law that increased the need for lawyers. some prominent personal injury lawyers were not able to meet the transition. Compensation for personal injury in New Zealand (1967) 162 Supra 113 163 Ibid at page 107 158 58 . medical misadventure is included in computing compensation. They moved to Australia where they now practice personal injury litigation. Claims for reimbursement for medical services are made by the medical profession. Licensed medical practitioners must fill out some forms.158 An interview conducted on a number of lawyers practicing in New Zealand before and after 1974159 revealed that the transition was made easier by the long winding down time.163 The fact that injuries caused to others by intent. On the questions of individual rights and responsibility.In the New Zealand system.

Tort actions may be a deterrent where there is a foreseeable probability that certain conduct will cause liability and it is possible to plan to avoid it. Neither regulations. the plaintiff must be a high wage earner. In Kenya currently. The lawyer will not take the case unless the client is an attractive plaintiff and the defendant is either a wellinsured individual or a financially sound corporation. he will need a good lawyer. The institutional and third party situations are the ones that may be affected. age. and social status as well as that of the potential defendant who might have been a cause of the injury. this may reduce his enjoyment of life and probably limit his future earning capacity. If he is found to have contributed to his injuries.4 Adopting The No Fault System In Kenya Adopting the no fault system will be a process that will require the spirit of co-operation due to the interests of affected parties on the idea and the economic interests sought to be protected.164 3. His compensation and future prospects depend only partially on the extent of his injuries and the cause of accident.A no fault scheme does not affect any situation in which an individual is personally at fault because the negligence is impromptu that may not be affected. His compensation may be limited by his own personal insurance. his compensation will be reduced by his degree of fault. For an injured person to successfully enter the torts system. merely the threat of successful adverse litigation. nor inspectors are needed to achieve this result. in instances where a person suffers an injury in an accident. The amount of compensation must at least cover the cost of litigation. To get a large amount of compensation. who because of the accident has suffered a large loss of 164 Supra fn 13 59 .

earning potential. His recovery will also be increased by the extent of pain and suffering since the accident and what he is likely to experience in the future. When the recovery of damages is in millions. If the client loses. the defendant’s advocate asks for another medical opinion which in most cases differs from that of the plaintiff’s advocate. What happens in Kenya today is that. Accident insurance companies have large staff and semi permanent outside law firms whose sole purpose is the defending of lawsuits for injuries caused by insured persons. the medical profession must be completely reformed. The doctors should be able to look at the patient within the first few days of the accident to get the very basic details of the injuries. 166 This is usually done due to the lapse of time between the date of accident and the time of hearing. the medical reports are administered as evidence in court with the medical examination report165 being the primary document to prove the extent of the injuries. they are able to cater for expenses and make some profit. It is also known as a P3 form. As the case progresses. The defendant must also obtain counsel. loss of enjoyment of life. they lose along with them. lawyers prosper. when its in hundreds of thousands. 60 . 165 This report usually is filled by a medical practitioner and is issued by the police upon the reporting of any accident. The plaintiff must be able to survive for some years without compensation from the defendant and must have an open mind of the likelihood of losing the case altogether. The aspect of medical opinions in order to fit someone into the structured compensation should only come from specific government hospitals in every District. In order to adopt a system that is devoid of all the ills of the tort system. Thus most lawyers will not take a case that will not yield results in terms of compensation. the plaintiff advocate can order for a medical opinion from an expert of their own choice166 alternatively.

000 due to a conflict in medical opinion.html at 23rd December 2008 169 Meme vs. advocates and medical practitioners. The Anti Corruption Police Unit must. Professional ethics require doctors to certify only what they can verify. The court stated that. having misapprehended the effect of the medical evidence. Republic169 be on the forefront to investigate all corruption and corruption-related offences either at their own initiative and/or as directed by the Attorney-General and/or the Commissioner of had been unduly influenced by the possibility of epilepsy and the damages would be reduced to Kshs 300.168 The other aspect that calls for reform is the police department and work ethics in this country. as stated in the case of Meme vs.The court can be misled by medial opinion as in the case of Butt vs. the judge. Khan167 where the court of appeal reduced an amount of Kshs 400. honest in submission of its findings and in the giving of evidence in court and a system that will ensure that the road traffic rules are adhered to in terms of insurance requirements without any form of corruption. The insurance industry must also be barred from conducting investigations due to the possibility of recruiting incompetent persons to conduct investigations on their behalf.000. Khan [1978] eKLR New Zealand Medical Association Press Release: Doctors not to blame for accident insurance system http://www. This should be done to prevent the likelihood of fictitious claims due to the collusion of the police.000 to Kshs 300. There must be a police system that is quick to investigate. 167 168 Butt vs. ambulance chasers. Republic and Another [2004]1 KLR at page 646 61 .org.

in order to succeed in replacing the fault system with a more viable one. we must also take account of the majority of injured who are presently left completely outside of the tort system. there may be an argument for aiming at comprehensive reform via limited reform.3. large scale reform is on the whole. The political process must provide the clear avenues of funding without the likelihood of interfering with the independence of insurers through subsequent legislation. There is no doubt one reason why. moral and economic prisms through which the reform is viewed. the law in Kenya is based on the fault system which requires an injured party to institute proceedings against the owner of a motor vehicle and/or the driver of the said motor vehicle and proof fault in order to get compensation. The reform from a system of fault liability to one of no fault depends upon the political. This system has occasioned disservice and injustice to most injured persons who are forced to live with permanent disabilities with little or no compensation and in addition the stigma of lengthy and costly legal proceedings. 170 Supra fn 39 at page 420 62 . there is need to ensure that the no fault system replacing the fault system is no more costly than the one being replaced. In that regard the following laws must be reformed and the recommended institutions established in order to accommodate the no fault system in Kenya.170 In that regard. Since any reformer must accept the realities of the political process. Currently. we cannot focus only upon the distributive effects between the class of victims and the class of wrongdoers. When we start discussing law reform. in my view. in the past. In a democratic system such as Kenya.5 Legal Reforms. Instead. harder to effect than small scale or incremental change. pressure groups have been able to secure the legislation of specific preferential schemes.

3.N Dick173. no person shall use.Book Production Consultants at page 1/3 174 Criminal Revision case number 37 of 1982 at the Nairobi High Court 63 . upon a 171 172 Supra fn 9 4(1) Subject to this Act. unless the court for special reason thinks fit to order otherwise.1 Insurance (Motor Vehicle Third Party Risks) Act171 Section 4172 of this Act expressly provides that. be disqualified from holding or obtaining a driving licence or provisional licence under the Traffic Act for a period of twelve months from the date of such conviction or for such longer period as the court may think fit. a motor vehicle on a road unless there is in force in relation to the user of the vehicle by that person or that other person. causing or permitting a person to use a motor vehicle on a road without insurance or security. The term of imprisonment for the offence created under this section is however sufficient. 173 JN Dick. In this case. such a policy of insurance or such a security in respect of third party risks as complies with the requirements of this Act. two distinct offences may be committed under this section.000 or more. In Kenya. This section has been borrowed from the English Road Traffic Act of 1988 section 143. as the case may be. secondly. In that regard.5. and such person upon a first conviction for such offence may. it impliedly seeks to secure compensation upon injured third parties incase of an accident. This should be amended to increase the penalties to about Kshs 50. and upon a second or subsequent conviction for any such offence shall. The case of R vs. people have been convicted for the offence of driving an uninsured motor vehicle. or cause or permit any other person to use. This section dictates a compulsory cover in regard to third party risks. cause to use or permit any person to use a motor vehicle unless there’s in force a policy of insurance or such a security in respect of third party risks. First. (1992). Motor Insurance. Qureshi174 demonstrates that the Kenyan courts have upheld the provisions of section 4(10 but with meager fines upon conviction. the use of a motor vehicle on a road without insurance or security in respect of third party risks. According to J. (2)Any person who contravenes subsection (1) shall be guilty of an offence and liable to a fine not exceeding ten thousand shillings or to imprisonment for a term not exceeding two years or to both. Subsection 2 however prescribes very minimal penalties in the event of breach of the provisions of subsection 1. no person shall use.

or bodily injury to. insurers include cover for various other risks. 1984 to carry on motor vehicle insurance business. or by a fine and imprisonment for a period not exceeding six months. liability in respect of the death of or bodily injury to persons being 175 64 . upon any person who is reasonably suspected of having committed any offence in connexion with the driving or use of any vehicle which is punishable only by a fine. (ii) failure to comply with this requirement shall not be a bar to the conviction of the accused in any case where the court is satisfied that the name and address of the accused could not with reasonable diligence have been ascertained in time for such notice to be served as aforesaid. it shall be lawful for any police officer to serve. In practice. notwithstanding the requirements of or provisions in any Act contained.176 Subsection 1 states that.written plea of guilt under section 116(1)175 of the Traffic Act chapter 403 of the laws of Kenya. It is however important to realize that the sections of the Insurance (Motor Vehicle Third Party Risks) Act apply only to the statutory cover requirements under section 5. and (b)Insures such person.In order to comply with the requirements of section 4. An amount of Kshs 600 is too minimal for the offence of driving an uninsured vehicle whose involvement in an accident would cost people millions in personal injuries recovery. a notice in the prescribed form requiring such person to attend court in answer to the charges stated thereon. depending upon the type of insurance cover required by the insured. 176 5. the policy of insurance must be a policy which (a)Is issued by a company which is required under the Insurance Act. Section 5 is central to cover given under the insurance policy. (i) Such notice shall be served not later than fourteen days from the date upon which the offence is alleged to have been committed. at such place and on such date and time (which may be later in the day on which the notice is served or on any subsequent date) as are shown on such notice or to appear by advocate or to enter a written plea of guilty: Provided that. or that the accused by his own conduct contributed to the failure. the accused was convicted of using an uninsured motor vehicle on a public road contrary to section 4(1) of the Insurance (Motor Vehicle Third Party Risks) Act punishable by section 4(2) of the said Act and fined Kshs 600. either personally or by registered post. any person caused by or arising out of the use of the vehicle on a road: Provided that a policy in terms of this section shall not be required to cover (i) liability in respect of the death arising out of and in the course of his employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment. or (ii) except in the case of a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment. persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of.

No sum shall be payable by an insurer under the foregoing provisions of this section if in an action commenced before. This Act states that. to be made a party thereto. a judgment to which this section allows is obtained. or (iii) Any contractual liability. The Act in no way absolves the insured if he has been in breach of the contract he has entered into with the insurer. apart from any provision contained in the policy he is entitled to avoid it on the ground that it was obtained by the non-disclosure of a material fact. If the no fault system is adopted. which they would otherwise have been able to avoid. or by a representation of fact which was false in some material particular. then the aspect of formal suits in regard to Third Party Risks has to be departed from. if he thinks fit. It is worthy to note that the wording of this section seems to make insurers liable to make payment to third parties even when a policy has been cancelled. This then has to be replaced by a system whereby the injured persons enter into an agreement for compensation with the insurer under a structured settlement scheme governed by the association of Kenyan insurers. unless before or within fourteen days after the commencement of that action he has given notice thereof to the person who is the plaintiff in the said proceedings specifying the non-disclosure or false representation on which he proposes to rely. Although the insurers may be obliged to meet a claim.Section 10 applies where after a certificate of insurance or certificate of security has been delivered under section 147 of this Act to the person by whom a security has been effected or to whom a security has been given. or. This system must also be followed by a requirement carried in or upon or entering or getting on to or alighting from the vehicle at the time of the occurrence of the event out of which the claims arose. the commencement of the proceedings in which the judgment was given. 65 . that he was entitled so to do apart from any provision contained in it: Provided that an insurer who has obtained such a declaration as aforesaid in an action shall not thereby become entitled to the benefit of this subsection as respects any judgment obtained in proceedings commenced before the commencement of that action. the government and the legal fraternity. if he has avoided the policy on that ground. they do have redress against the insured. and any person to whom notice of such action is so given shall be entitled. he has obtained a declaration that. or within three months after.177 Subsection 2 requires a demand letter to be sent to the insurance company 14 days before the suit is instituted. 177 This is espoused under section 10(4) of the Insurance (Motor Vehicle Third Party Risks) Act.

If a contribution is paid by an insurer to the policy holders' compensation fund. (revisable annually). if he deems it necessary for the protection of policy holders. The provisions of this Act must also be amended to provide for a motor pool or fund whereby all the claims will be settled from. the contribution may be treated as an item of expenses of management of the insurer for the financial year in which the amount is paid.178 This section only covers individual policyholders. Thus in the case of a person who has taken out a third party risks cover.of the insurance companies submitting information of the claims to the Minister for Transport who must be obliged to maintain records of this information. medical referees. injured people’s rights to information. There should also be a provision that obliges parties to enter conciliation or arbitration in accordance with specific regulations. the maximum The policyholders’ compensation fund is established under section 179 of the Insurance Act. Section 15 should be subject to the provisions proposed in the 2008/2009 finance budget in the Finance Bill 2008 to add that should an insurance company not be in a position to settle the claims within a period of 90 days. Sub section two states that. approved forms and regulation making power. by notice in the Gazette. Subsection one states that. establish a policy holders' compensation fund. and whose vehicle is involved in an accident. confidentiality. determination of claims. This law must also accommodate a miscellaneous chapter that covers maximum premium rates. the Minister may. Section 10 should thus be amended fully to accommodate the foregoing propositions. then a winding up process must be instituted by the Insurance Regulatory Authority. Subsection three continues that. for the purpose of providing assistance to the policy holders of an insolvent insurer. The Policyholders’ Compensation Fund provides for a compensation of up to a maximum of 100. prescribe all matters relating to the policy holders' compensation fund. the Minister may.000 which in most cases cannot even cover the full damages of a seriously injured person. The law should also provide an option whereby injured persons also have recourse to common law tort remedies incase their claims exceed the stipulated compensation threshold. 178 66 .

However. and has held for a period of. the mandate of making the rules binding the tribunal shall vest in the National Assembly182 which shall enact a law183 that covers the compensation of injured parties. a person shall not be qualified to be appointed a judge of the High Court unless. or he holds.179 In this regard. 179 This is stipulated under the Insurance (Policyholders Compensation Fund) Regulations of 2004 under regulation 14(1) and (2). 181 The Constitution under section 61 subsection 3 states that. 67 . the legislative power of the republic shall vest in parliament which consists of the president and the National Assembly. the special tribunal is to be constituted of such members as appointed by the Minister of Transport in consultation with Association of Kenya Insurers (AKI) and representatives from the legal profession as nominated by the Law Society of Kenya (LSK). or for periods amounting in the aggregate to. Lakestar. The motor vehicle policyholders are only given a period of 15 days to claim any losses upon which claims made after the lapse of the 15 days shall not be settled.amount of compensation in the case of insolvency cannot even be sufficient to cover the total costs of the claims. a judge of a court having unlimited jurisdiction in civil and criminal matters in some part of the Commonwealth or in the Republic of Ireland or a court having jurisdiction in appeals from such a court. the creation of a motor pool would provide for a mechanism in which pending claims from third parties to insolvent insurance companies would be settled. Four other members as may be appointed by the Minister in consultation with AKI and LSK. or has been. A Judge appointed by the president as per the requirements in the constitution181 who shall preside over the negotiation process. 182 The legislative powers of the National Assembly are stipulated under section 30 of the Constitution which states that. he is. However. not less than seven years. 180 An example of a situation whereby third parties lost millions worth of claims is the instance of the solvency of Invesco Insurance. and United Assurance among many other insurance companies which have also gone down.180 A special tribunal for determining motor accident claims should be established by the Minister by notice in the gazette for the purpose of hearing motor accident claims under the Insurance (Motor Vehicle Third Party Risks) Act. or he is an advocate of the High Court of Kenya of not less than seven years standing.

However there Motor Accident Compensation Act David Kemp and Peter Mantle.5.185 The scope of this no fault law in Kenya should cover reasonable expenses incurred within two years from the date of accident for necessary medical services.3. to provide explanatory notes that would be required to assist in selecting the appropriate table to be applied to suit each individual case and also to form the basis of guidance under the Motor Accident Compensation Act discussed hereunder. 3. net loss of support to family members in the event of the death of the bread winner186 and net loss of earning power for employed persons. ‘The automobile problem in Puerto Rico: Dimensions and proposed solutions’. Insurance Law Journal at page 884.5. Damages for Personal Injury and Death. Secondly. Sweet and Maxwell at page 241 185 This resembles Aponte and Denenberg’s assertions in.(1999) 7th edition. It must also provide extensive medical benefits and limited non fault benefits of other types while preserving tort actions for larger claims. the Law Society of Kenya and the Association of Kenya Insurers to come up with a report on the feasibility and desirability of issuing authoritative tables for the assistance of the Motor Accidents Special Tribunal in assessing an award of damages for continuing pecuniary loss arising out of personal injury or fatal accident claims. 186 Otherwise referred to as loss of expectation for life in the torts process in Kenya 184 183 68 . (1968).3 The enactment of the Motor Accident Compensation Act in Kenya This piece of legislation will outline the powers of the Tribunal and lay down various structured injuries and the amount payable upon such injuries.2 The establishment of an Inter Professional Working Party184 This working party should be established in Kenya by a formal working group of the Actuarial Society of Kenya.

if the death is more or less instantaneous. As stated earlier. Damages for pain and suffering. under the Law Reform Act as espoused in the case of Kemfro Africa Limited t/a Meru Express Services & Another vs. The Act will also establish an Accident Compensation Corporation which will be funded by the insurance companies as opposed to community responsibility. levies are from the employers.should be recourse to litigation if. drivers. and owners of automobiles who are said to provide the funds.188 If accident compensation is available to a large number of people. with any shortfall covered out of the country’s general revenues. the only damage recoverable will be the deceased’s loss of expectation of life. rather. In this regard. 188 Supra fn 111 69 . in the Kenyan situation. it should be embraced for genuine disabilities. loss of amenities and earnings are for the period he survived. it should not increase recklessness. an award of damages for loss of expectation of life is awarded under the Law Reform Act (cap 26) and the Fatal Accidents Act (cap 32). 187 This system in Massachusetts for example allows recourse to a court of law if the injury exceeds 500 dollars or causes death or consists in whole or in part of loss of a body member. Lubia & Another (No 2) (1987) KLR at 30.5 million shillings. So. so the Estate should recover the damages the deceased would have recovered but for his death. In community responsibility. the reasonable and necessary expenses for medical and hospital services exceed 1.187 The source of funds for the no fault system will be derived from the premiums paid for third party insurance risks which will be placed in a pool managed by a body formed by the government from the Association of Kenyan insurers and individual insurer representatives. it is the deceased’s own cause which survives for the benefit of his Estate. or a permanent and serious disfigurement or loss of sight or hearing. However. in respect of a fatal accident. the premiums for a given year will cater for compensation for injuries suffered within that given year.

loss assessors. These include insurance brokers and Agents. transact. insurance investigator.190 It takes many forms but usually it starts with the solicitation of patients by runners. Brokers need to be either directly authorized by the insurance authority under the law or become a member of a body of insurance brokers approved by the insurance authority. Every time the police are called to a scene of accident.189 Agents should be subject to a code of practice for the administration of insurance agents which should govern the market conduct of insurance agents. This was with effect from 1st January The Motor Insurance Ethics Act will seek to address the issue of insurance fraud from persons directly involved or insurance intermediaries. 190 Fifteenth statewide Grand Jury report.5. the government in conjunction with the Association of Kenya Insurers must put in place adequate measurers to contain motor insurance fraud. this kind of fraud has been turned into a personal slush fund for legal and medical practitioners. or carry on insurance business in Kenya the business of a broker. Runners pick up copies of the crash reports in bulk and use them to solicit accident victims or sell the list to at third party for the purpose of solicitation. medical practitioners are willing to pay up to 500 dollars for each patient Section 150 of the Insurance Act provides that only registered brokers. the Act also provides that no person shall. After the establishment of the no fault insurance system. commence. This could take the form of ambulance chasing. after the expiry of 3 months from the appointed date. loss adjusters. agent.191 Usually. loss adjuster.3.motor assessor. surveyors and claim settling agents to carry on business. insurance surveyor.4 The enactment of the Motor Insurance Ethics Act There is need for supervision of insurance intermediaries. the runners keep the information and solicit the victims either by telephone or by visiting the victim’s home. In Florida for example. risk managers. risk manager . agents.html as at 3rd February 2009 191 ibid 189 70 . report on Insurance Fraud Related to Personal Injury Protection(August 2000) available at http://legal. medical insurance provider or claims settling agent unless he is registered under the Insurance Act. The runner convinces the patient that they need to see a doctor and usually. a crash report must be filed with the local police station.

but no no-fault benefits for non-pecuniary loss or property 192 193 ibid Fred Schulte& Jenni Bergal.193 Brokers also set up appointments for patients at diagnostic clinics and bill the insurance company for their services. This finding allows the injured party to sue the insurer for pain and suffering.Lexis Nexis/News library.192 The Act must therefore criminalize the act of ambulance chasing. Thus in an effort to contain personal injury protection fraud. insurance fraud.6 Institutions to support the no-fault system in Kenya Before the adoption of any institutions in support of the no fault system. Some personal injury attorneys will also refer their clients to a medical practitioner who will find that the injured party has some permanent disability. Solicitation of patients must also be criminalized by this law. the Motor Insurance Ethics Act must stipulate how medical practitioners dealing with motor accident victims should conduct themselves in the course of dealing with the patient. available at http://www. Kenya must enact a statute designed to prevent accident reports from being used for commercial solicitation of the victims. Unethical attorneys also contribute to the problem of insurance fraud. Since the medical profession is self regulating. (2000). Part of the problem in the medical field comes from accident or pain clinics that are not owned by physicians. it is important to understand that. First. Traffic Accident Schemes fall into two broad categories.html as at 3rd February 2009 71 . Crash Allies tap Auto Insurers allege costly billing Abuses: Test. Unethical medical professionals contribute to the problem of personal injury protection. 3. there is add-on schemes which typically provide limited no fault benefits for pecuniary losses arising from personal injury.referral. Treatments and investigators.

However.196 In this regard. but there are provisions requiring no-fault benefits to be set off against tort damages to prevent double recovery. The American Tort Process. having once been accepted. (1988). the no-fault benefits are similar in type to those available under adds-on schemes. this right is abolished to the extent that the plaintiff is entitled to recover no fault benefits. appears to us that no scheme can be regarded as wholly satisfactory if it admits of an injured third party without any fault of his own. failing to obtain the compensation which he is intended to secure. Many people injured by motor vehicles find that they are unable to obtain compensation because of the gaps in the private insurance system such as where injuries were caused by someone illegally driving without insurance. the right to sue in tort in respect of pecuniary losses is not affected.damage. 195 194 72 . the Kenyan government should enter into an agreement with insurers to compensate victims of uninsured drivers. Under modified schemes.1 The Motor Insurer’s Bureau Particular concern has existed with regard to the operation of liability insurance for road accidents. They should form the Motor Insurers’ Bureau which should take considerable advantage of the technicalities resulting from the J G Fleming.6. but setoff provisions prevent double recovery.194 The second type of no fault scheme can be called the modified scheme. The Modern Law Review volume 48 number 3 page 278. Under such schemes the tort action remains intact. The principle of compulsory insurance therefore.Oxford at page 166 Ibid 196 Richard Lewis. although sometimes greater in amount. In some jurisdictions. ‘Insurers agreements not to enforce strict legal rights: bargaining with government and in the shadow of the law’ (1985).195 3. in other jurisdictions. the right to sue for tort damages for non pecuniary loss is abolished in less serious cases.

M. Kenya should also consider amending the companies Act197 to make it possible to restore a defendant company solely in order for it to be sued. The most important use of the scheme would be in relation to drivers who cannot be traced. The enactment of an Accidents Compensation Act should adequately cover the Motor Insurers’ Bureau. 199 Hence the need to join an insurance company as a party 200 [1964] 2 QB 745 & 757 198 197 73 . even though it has been dissolved. This agreement should however be made available to the public in order to avoid ignorance of rights secured.B200 stated that the Motor Insurers’ Bureau is as important as any statute. the minister of transport and other representatives of other companies and associations dealing with motor insurance. To avoid problems in enforcement. the Insurance Regulatory Authority. and Lakestar among other insurance companies. not only at the hands of administrative agencies specifically created for this purpose but also at the hands of legislatures and courts. this agreement should be incorporated into the law. Thus an insurer cannot avoid liability merely because it has been dissolved. the agreement should be devoid of government interference. The agreement must be signed by the chairman of the Association of Kenyan Insurers.199 The government and the Motor Insurers Bureau should set up a central fund just for this purpose. In this regard.requirements of service.198 This however comes with technicalities because an individual defendant and not an insurer is technically the party to the action. In case the claim Cap 486 of the Laws of Kenya Examples of dissolved companies in Kenya include Invesco Insurance. However.I. United Insurance. The Motor Insurers’ Bureau in Kenya however will only deal with claims under the no fault system incase the drivers or owners of the motor vehicles cannot be traced or incase of uninsured motor vehicles. Lord Denning in Hardy vs. it should be incorporated in statute because insurance transactions & institutions are subject to regulation in broad sense.

201 Secondly. (1975). Thirdly. This is so as to ensure that it does not satisfy case of deliberate running down. 6th edition.202 The bureau must be furnished with enough personnel to aid in the investigations when an application has been placed before it. then a judgment from a court of law against the uninsured or untraced person must be obtained and notice of such proceedings against an uninsured person must be given to the Bureau within 21 days after the commencement of such proceedings. that the untraced person’s liability is required to be covered by insurance under the Insurance (Motor Vehicle Third Party Risks) Act.000 as stipulated under section 34 of the said Act. to ensure that all subscriptions due to it from the government and each insurance company are paid promptly and in any case within three months after the commencement of each financial year and to keep a record of all claims made under the Motor Accident Compensation Act from persons who are A person is declared untraced if he cannot be served. See Mc Gillivray & Parkington on insurance law. to register and keep record and directory of all insurance companies undertaking motor insurance business. first. cannot trace one of those persons. The Bureau must accept applications for payment in respect of death or bodily injury resulting from the use of the motor vehicle on a road where. It however deals with claims of uninsured or untraceable motor vehicle owners. the death or injury was caused and if that untraced person were to go to court. he would be liable in damages.2 Establishment of the Nominal Defendant Council203 This council could be formed in the place of the Motor Insurers Bureau whereby. Sweet and Maxwell at page 2341 203 This council is also in force in Uganda and it is established under section 15 of the Motor Vehicle Insurance (Third Party Risks) Act chapter 214 of the Laws of Uganda. the applicant cannot trace any person responsible or where more than one person was responsible.5 million shillings. 202 201 74 .exceeds the ceiling of 1. the council’s functions would be. 3.6. It is funded by both the insurers and the government and satisfies judgements up to a maximum of 150.

They can only claim through the Motor Accident Compensation Tribunal discussed earlier to obtain structured compensation. Minister for Transport and the Attorney General and three members nominated by the Law Society of Kenya.untraceable and/or uninsured. The maximum compensation that the council can award shall be based on the ceiling of 1. The council shall also be required to set offices in all the provincial headquarters in the country. four representatives from the Association of Kenya Insurers.5 million shillings prescribed for the no fault system. claimants who do not fall under the category of uninsured or untraceable drivers do not qualify to bring a claim against this council. The composition of the council Board shall be. These persons shall hold office for a period of three years subject to reappointment but a maximum period of two terms in case of reappointment. This council shall have powers to borrow using security. power to invest any monies that it is not in use of at any given time. three members as may be nominated by the Minister for Finance. depreciation or renewal fund or such other fund a it may determine. The sources of funds for the council shall be subscriptions from the government which shall be sourced from the consolidated fund. However. and the power to create a reserve. 75 . subscriptions from all the registered Motor Insurance Companies. The members of the council shall be paid by the government and may hire any additional staff as they may deem necessary for the execution of their duties.

the Motor Insurance industry will have computerised documentation and easy retrieval of information if the no fault system is established. individual insurance companies should fully exercise their creativity and innovation to voluntarily create their own detailed manuals in regard to the aspects of compensation. At the same time.6. The check points in every manual should represent standards to be used by inspectors in evaluating the rate of occurrence of accidents and in turn. underwriting & IT Managers.3 Installation of the Motor Insurance Data System With the installation of the Motor Insurance Data System204. it enhances the inspection and verification of the reserve fund set aside every year for compensation of injured persons. These insurance company manuals should take note of the size and nature of the insurance company and the number of claims that have been made. This was proposed by the Motor Insurance Data System Workshop held at Sarova Pan Afric Hotel on 8th May 2008 for claim. This will in turn ensure that the size and expansivity of the insurance company despite the aspect of a no fault system is comfortably sustained by its capital base. As part of their efforts to ensure sound and proper operations and in accordance with the principle of self-responsibility.3. the frequency of these claims. This will save time and improve on the effectiveness of the insurance industry in settling claims under the no fault system. The Insurance Act under section 75(4) provides for insurers to furnish the commissioner with statistical data and other information on the basis of which any rate of premium or schedule or manual has been computed. 204 76 .

It is worthy to note that matters arising between an insurer and the insured not touching on the fundamental basis of the contract of insurance must not be allowed to defeat the claims of the accident victim. be entitled to compensation receive nothing from the tort system. delay in the expedition of justice. The main defects of the tort system which the no fault system seeks to ameliorate include high cost of litigation. insurers are directed to consult widely. There is need to accompany parliamentary bills by impact statements assessing the financial costs and benefits of the measures being proposed. In drawing up laws that will influence the insurance industry. inequalities in awarding damages. As a personal injury compensation mechanism the tort system is extraordinarily expensive in absolute terms.CHAPTER FOUR 4.0 Conclusion and Recommendations Serious dissatisfaction with the tort system of compensation for personal injury and death opens an avenue for the consideration of another mode of compensation for personal injury such as the no fault system of compensation. This law can be drafted by certain 205 77 . Its benefits in terms of accident and injury prevention are at best limited and there are good reasons to think that a significant proportion of injury victims who would.205 An example is the Association of British Insurers in the passing of the This can only be achieved through private lobbying through members of parliament to support a certain law drafted for the purpose of streamlining the insurance industry. according the rules of tort law. stringent rules of evidence and proof of fault. The Association of Kenya Insurers must lobby for legislation of laws that will streamline the insurance industry. The introduction by statute of compulsory insurance for road accidents has shifted the whole focus of the law of torts from penalising tortfeasors to compensating their victims.

In that regard. In Kenya. under the current law. While insurers have made bumper profits. people injured through no fault of their own are suffering. The tribunal will rely on medical evidence and a structured table stipulating the amount of compensation payable for various members of the insurance industry together with legal drafting experts. This can only be achieved through the adoption of the no fault system. several laws must be amended and other institutions established. the injured persons are saved the agony of dealing with slow court processes and expensive litigants. The no fault system is effective in that it spreads the liability for road accidents to all motor insurers and insured persons. This will then be introduced in parliament as a private members bill if floated on the floor of parliament by a member of parliament or a public member’s bill if introduced to parliament by a member of the public. The legal profession should step up their efforts to have the lemma government adjust tort law in a way that restores fair compensation to injured persons. This will ensure that the litigation process under the fault system is abolished. 78 . unable to receive adequate compensation for their suffering. The Insurance (Motor Vehicle Third Party Risks) Act must be amended to provide for a special tribunal that will be adjudicating motor accident claims. injured individuals are in most instances limited in their access to compensation where community standards suggest that they deserve great recompense.Damages Act of 1996 whose outcome was mightily convenient to the insurance industry whose outcome was as a result of whispering in appropriate ears. Insurers have been the sole beneficiaries of massive reductions in personal injury payments to those injured through no fault of their own. Thousands of victims injured through no fault of their own are struggling to receive fair compensation under current personal injury laws. This then requires support by a simple majority in parliament to get past the second reading into the committee stage and finally the third reading before assent by the president. In order for the no fault system to work in Kenya.

suing and being sued with perpetual succession. Thereby it is the recommendation of this academic research that a Motor Insurance Ethics Act be enacted. This Act must place the ceiling at 1. the medical profession must also be checked to ensure that only qualified doctors conduct an examination of the injured party and in turn draw the medical report which will guide the tribunal in computing the amount worth in compensation. The insurance intermediaries must also be sufficiently covered by law. In that regard. it shall be a requirement that the Bureau or the Council be notified of such proceedings and later be referred by the court in case of an award of damages for it to satisfy. it is my recommendation that the government and the Association of Kenyan Insurers should establish a Motor Insurers’ Bureau or the Nominal Defendant Council which will be a separate legal entity.5 million ceiling. In the event that an accident happens and the owner of the motor vehicle cannot be traced or is uninsured. This Act must deal with the professional aspects 79 .injuries. Insurance brokers and agents must be subject to a code of conduct that regulates them in terms of professional ethics. This institution shall receive referrals of claims from the Motor Accident Compensation Tribunal for the claims that are below the 1.5 million shillings. Claims that are beyond this ceiling shall be taken to court and in the instance that this happens. Parliament should also enact the Motor Accident Compensation Act which will tabulate the amounts payable for various injuries. capable of owning property.

the insurance industry and the government must co-operate. 80 .of insurance intermediaries and subject them to rules that shall govern their duties as specified in the foregoing chapters of this research. This will prevent the loss of information and speed the rate of claims settlement. There also has to be extensive public awareness programmes to ensure that members of the public are aware of the change in the motor liability system and the issues that arise therewith. There has to be political will to enact the proposed laws and establish the proposed institutions. The operation of the no fault system will be made easier by the installation of a motor insurance data system which will ensure that retrieval of information is easier and more organised. In order to achieve these objectives.

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