Insurer’s fiat exposes its lack of thought

That insurance companies are not charitable organisations is a known fact as they are in business and have to make money for their shareholders.

However, the recent declaration by certain insurance firm that it would not cover BMWs and Subarus valued below Sh 1.5M is not only laughable, but also callous.

And it came down like a commandment: “As a measure to control our increasing loss ratios on auto, we write to inform you that with immediate effect we shall not accept underwriting of any more new business for Subaru and BMW vehicles valued Sh1.5 million and below. These instructions take effect immediately,” the letter read.

The limit set by the insurer essentially means the majority of used Subaru cars being imported into the country may not get cover because their value is either equal to or below the cut off amount.

The firm, AIG, said they had decided so due to increasing number of write-offs from the two vehicle brands.

“Most of the Subaru claims are usually write-offs meaning we have to buy a new vehicle every now and then,” the company noted.

It blamed the Kenyan motor insurance industry for not factoring in general lifestyles of drivers in determining premium rates.

So let us take it up from here.

We have two men — let us call them Njeru and Njiru.

Njeru has a Subaru, he acquired early this year after upgrading from a Toyota of course.

Njiru is still stuck with his second car, a Toyota. They live in the same neighbourhood and they frequent same entertainment spots in the city.

After a couple of drinks, they go home just after midnight.

On the way home, Njiru, with a point to prove that his Toyota can match the Subaru engages Njeru in a road race.

To ensure that he wins, Njiru must push his Toyota to the brink if it is to match the legendary reputation of a Subaru.

Despite his best efforts, Njiru loses to the Subaru and he hates it.

While the Subaru was asked to do just a little more than usual on this occasion, Njiru nearly sacrificed it all. He will most probably try it again one of these fine evenings when the rains subside.

And here is the big question: is Njiru a safer bet for the insurance firm?

Why pick on only two makes as the villains of your profit margin?

Isn’t that casting negative aspersions on hard-working young men and women who saved and purchased Subarus and BMWs?

Further, don’t we have write-offs from other makes as well?

If the firm is worried about young drivers, all they needed to do is state that they will only cover vehicles belonging to motorists of certain ages.

To suggest that a 23-year old motorist with a Subaru is different at the steering wheel with another driving a different car simply does not add up.

If the write-offs are many with these makes of cars, then they should just raise the premiums and let the motorists choose what they want without feeling discriminated against or even ostracised.

The insurance firm should not have used a back street or a round about way to discriminate against owners of these makes of cars.