Insurers urged to rethink PSV's high-risk model

Public Service Vehicles at the Green Park Terminus in Nairobi. [File, Standard]

The insurance industry is being challenged to innovate coverage for the Public Service Vehicle (PSV) sector which remains largely shunned as 'high-risk' despite its critical economic role.

“For too long, PSV insurance has been associated with fear of non-compliance rather than opportunity,” said William Kiama of the Association of Kenya Insurers (AKI). 

Kiama, who spoke during Directline Assurance’s 2oth anniversary celebrations, noted the sector is a ‘giant hidden in plain sight,’ contributing 8.3% to GDP and supporting at least eight livelihoods per vehicle.

Directline Assurance and Amaco Insurance are the dominant players insuring matatus in the country, with many players giving the sector a wide berth, citing challenges that include fraudulent claims, weak law enforcement and non-economic premium rates. 

Kiama also noted a growing opportunity in the boda boda sector as well as digital hailing taxis that have also been shunned as they seen as high risk.

“The boda-boda economy alone contributes 4.4per cent to GDP, circulating nearly Sh2 billion every single day. Add digital taxis, ride-hailing services and delivery motorcycles, and we begin to see a transport economy that has quietly become one of Kenya’s most powerful engines of growth,” he said, adding that PSVs are key in employment creation, with one matatu creating as many as eight direct and indirect jobs.

“The PSV sector… is a conveyor belt of micro-commerce. When a vehicle is uninsured, the consequences are far-reaching and means lost income, lost jobs, broken supply chains and entire communities affected,” said Kiama.

Despite its critical nature, the sector is also a source of a staggering economic drain due to accidents. As of late 2025, road carnage is estimated to cost the Kenyan economy up to Sh800 billion annually, according to data by the National Transport and Safety Authority (NTSA). NTSA in its National Road Safety Action Plan 2024-2028 noted that these losses stem from the destruction of vehicles, overwhelming pressure on the healthcare system, and the loss of the country’s most productive citizens, typically aged between 20 and 54 years.

Samuel Musumba programme director NTSA noted incidents on Kenyan roads are hurting the country. He noted that NTSA has recorded 4,380 deaths due to road accidents as of November, further noting that annually, other than loss of lives and life altering injuries, the accidents also cause heavy losses to the economy.

“Accidents and the incidents that we see on roads are costing this country enormously. Aside from the deaths and the injuries, in 2024, it cost the economy 8.2 per cent of GDP which translates to  Sh1.327 trillion,” he said.

“If we do nothing, this is projected to reach 10 per cent of GDP, which is about Sh2.3 trillion of GDP, for a country such as Kenya, that is really a big loss.”

NTSA in its action plan for the  2024 – 2028 period noted that accidents are underreported and could in reality be between three and four times higher and put the annual deaths at about 12,000. 

Musumba also noted that behavioral issues are to blame for 90 per cent of road incidents, urging passengers to speak up against instances such as overloading and drunk driving.

Wilson Maina, acting chief executive Directline said the firm is looking at executing new strategies in the coming year as it seeks further growth. 

Maina encouraged motorists to adopt good motoring practices including adhering to road safety regulations as well as ensuring that vehicles are well maintained. 

“As we gear up for the festive travel, let us comply with road safety regulations and heed the safety messages shared throughout the season. Road carnage traditionally rises during this period, leading to tragic loss of lives," 

Remember to wear your safety belt when travelling, be it in personal or PSV vehicles as this remains critical to savings lives