Insurance firms have started to supply spare parts in a bid to cut cost of repairs, which has seen them incur hefty bills.
However, garage owners see that as a ploy to eat into their profits.
Repairers say that, apart from crashing in on their profits, insurance companies buy the cheapest spares possible and supply them to the garages, forcing them to use poor quality parts at the expense of the clients’ safety and interests.
Under their umbrella body Kenya Motor Repairers Association (Kemra), the repairers also claim that assessors—automotive engineers with the mandate of negotiating repair costs on behalf of insurance companies—are forced to authorise substandard repairs with the fear of losing business and intimidation the order of the day.
CAUSED DELAYS
Kemra chief executive officer Mercy Kyande said the move has caused delays in repairs and congested garages.
UAP Insurance, for example, in its service level agreement, says the repairer shall allow for a grace period of 60 days after submitting repair estimates to ascertain if the vehicle is repairable and that, during that time, no storage charges shall accrue. The agreement requires the repairer to offer storage for a motor vehicle for 60 days, meaning they can stay with the vehicle for four months.
It also states that the company may supply parts to the repairer, who shall accept to use the parts, and that UAP will pay the garage the handling fee at a rate of 20 per cent on the parts, a deal Kemra says will compromise on quality.
“We can no longer guarantee clients that the repairs we conduct are of high quality because some insurers supply repairers with very low quality spare parts,” said Ms Kyande. “Despite several warnings to these companies by the repairers association, the insurance companies still insist that they must cut costs.”
DISPELLED ALLEGATIONS
Ms Kyande said during an interview that the motor vehicle owners do not get value for the money they pay insurance companies.
Though confirming that some insurance firms supply parts to repairers, Association of Kenya Insurers (AKI) chief executive officer Tom Gichuhi however dispelled the allegations as business politics.
He said motorists had not raised such issues with insurers.
“There are three options for compensation: Repair, replacement and payment of cash,” Mr Gichuhi explained, “and the policy document does not prescribe how the repairs should be done.
“The clients have always been happy, and so the repairer should have an issue only if they are not paid their money.”
He said the repairer’s job was to repair and not to supply parts, adding that there could be vested interests by Kemra members who may be owning spare part shops.
RIDICULOUS CLAIMS
Ms Kyande however said insurers mostly used suppliers who are little known to the industry and so the claims were ridiculous.
In a letter to APA Insurance Company dated March, 14, 2017, Kenra said the move was a variation of the repair contract from one where the repairer supplies parts to one where the insurer sources and delivers parts to the repairer, who then only provides the technical expertise of repair.
“This move is borrowed from the developed economies but we note that the model needs to be adopted in a holistic manner and not on piecemeal basis,” said Ms Kyande.
She said the contract between the insurers and repairers naturally and legally required both parties to engage and, when there is a need, strike a compromise.
OBSERVE ETHICS
“We believe insurance companies conduct their business within the law and that they adopt best practice and observe ethics in their operations,” said Ms Kyande. “They must win the trust of the public and their customers, who include our members, by portraying utmost good faith at all times.”
Kemra said the motor vehicle labour-only contract usually puts into consideration factors such as actual man-hours hourly rates, quality of parts, timeliness and full supply of parts.
Insurance Regulatory Authority communications manager Noella Mutanda said they had not received complaints from repairers—despite letters in our possession showing the contrary.