Introduction
1. This appeal arises from the judgment of the Insurance Appeals Tribunal ("the Tribunal") delivered on 11 June 2024 dismissing the Appellant's appeal against the decision of the Insurance Regulatory Authority ("the IRA") communicated on 5 September 2023. The Tribunal upheld the decision directing the Appellant to rescind its repudiation of the 2nd Respondent's insurance claim and settle the same under Policy No. 01/01/024/0657/2022.
2. The dispute concerns the repudiation of a material damage claim following water damage to electronic equipment insured under the Appellant's policy. The Appellant declined liability on the basis that the damaged equipment was located at premises different from those specified in the policy. The IRA found that the repudiation was unjustified and directed the Appellant to reconsider and settle the claim. The Tribunal affirmed that determination, prompting this appeal.
3. The Memorandum of Appeal raises eleven grounds which, although framed separately, challenge the Tribunal's judgment on three principal fronts.
4. First, the Appellant contends that the decision communicated by the IRA was ultra vires because it was made by an Assistant Manager rather than the Commissioner of Insurance as contemplated under section 204A of the Insurance Act.
5. Secondly, it argues that the Tribunal fundamentally erred in interpreting the insurance contract by disregarding the location of risk as an express and material term of the policy, thereby shifting the insured's duty of disclosure to the insurer.
6. Thirdly, the Appellant contests the Tribunal's finding that the 3rd Respondent acted as its agent and disputes the application of the Insurance Regulatory Authority Claims Management Guidelines.
Background
7. The material facts are largely uncontested.
8. The 2nd Respondent obtained from the Appellant an Electronic Equipment Insurance Policy through the 3rd Respondent, an insurance intermediary associated with I & M Bank. The policy insured electronic equipment with a declared value of Kshs. 25,812,423.
9. During May 2023, following heavy rainfall, electronic equipment belonging to the 2nd Respondent sustained water damage while stored in premises situated behind Sagas Hotel along Thika Road. The loss was reported to the Appellant through the 3rd Respondent and a claim for indemnity lodged.
10. Upon investigation, the Appellant concluded that the damaged equipment was not situated at the location described in the insurance policy. Whereas the policy indicated the insured premises as Regina Pacis Building, Menelik Road, Kilimani, the loss occurred at different premises. By a letter dated 5 July 2023, the Appellant repudiated liability on the ground that the risk that materialised fell outside the scope of cover.
11. Aggrieved by the repudiation, the 2nd Respondent lodged a complaint before the Insurance Regulatory Authority pursuant to section 204A of the Insurance Act.
12. After receiving responses from the parties and reviewing the documentation placed before it, the Authority communicated its decision on 5 September 2023, directing the Appellant to rescind its repudiation and settle the claim within fourteen days.
13. Dissatisfied with that determination, the Appellant lodged Insurance Appeals Tribunal Appeal No. 7 of 2023.
Proceedings before the Tribunal
14. Before the Tribunal, the Appellant maintained that the Authority had exceeded its statutory mandate by compelling payment under a policy that did not cover the loss. It contended that the location of risk constituted an express contractual term, that the insured had breached its duty of utmost good faith by failing to disclose the relocation of the insured equipment, and that the Tribunal could not rewrite the parties' contract.
15. The Appellant further argued that the decision communicated by Ms. Isiann Masha, an Assistant Manager in the Consumer Protection Department of the IRA, was a nullity because section 204A vests decision-making authority exclusively in the Commissioner of Insurance.
16. The 1st Respondent maintained that it lawfully exercised its statutory dispute resolution mandate under section 204A of the Insurance Act and that the Appellant had not challenged the Authority's jurisdiction during the administrative proceedings. It further maintained that the insurer had failed to undertake adequate due diligence before underwriting the risk and could not avoid liability by relying on facts that reasonable investigation would have disclosed.
17. The 2nd Respondent contended that it had disclosed all information requested during the proposal process, that no proposal form requiring disclosure of the storage location had been completed, and that the Appellant and the 3rd Respondent relied upon information obtained from the financing bank without undertaking any independent verification. It further argued that the insurer could not rely on technicalities after accepting premiums and issuing cover.
18. The 3rd Respondent maintained that it discharged its obligations as an insurance intermediary based on information supplied by the insured but equally argued that the communication issued by the Assistant Manager was not a decision contemplated under section 204A of the Insurance Act.
19. Upon considering the evidence and submissions, the Tribunal dismissed the appeal, upheld the Authority's determination and directed that each party bear its own costs.
Grounds of Appeal
20. The Appellant challenges the judgment on eleven grounds which may conveniently be condensed into the following issues:
i. Whether the Tribunal erred in holding that the decision of the Insurance Regulatory Authority was valid notwithstanding that it was communicated by an Assistant Manager.
ii. Whether the Tribunal misdirected itself regarding the insured's duty of disclosure, the doctrine of utmost good faith and the location of risk under the insurance contract.
iii. Whether the Tribunal improperly imposed a duty of due diligence upon the insurer contrary to the contractual allocation of obligations.
iv. Whether the Tribunal misapplied Clause 7.10 of the Insurance Regulatory Authority Claims Management Guidelines.
v. Whether the Tribunal erred in holding that the 3rd Respondent acted as an agent of the Appellant.
The Appellant's Submissions
21. The Appellant submits that the Tribunal fundamentally misdirected itself in law by upholding what was, in essence, a non-existent administrative decision. Counsel argues that section 204A of the Insurance Act vests the statutory power to determine disputes exclusively in the Commissioner of Insurance. Since the impugned communication dated 5 September 2023 was authored and communicated by Ms. Isiann Masha, an Assistant Manager in the Consumer Protection Department, and not by the Commissioner, it is submitted that the decision was ultra vires, null and void ab initio.
22. The Appellant further submits that the Tribunal rendered contradictory findings on jurisdiction. On one hand, it stated that it would not address the issue of ultra vires any further, yet on the other hand proceeded to hold that the decision of the Respondent was not ultra vires. Counsel argues that the Tribunal thereby failed to determine a jurisdictional question which went to the root of its mandate.
23. The Appellant further argues that the Tribunal improperly upheld a decision described in its final orders as the "decision of the Commissioner" despite there being no evidence that the Commissioner ever rendered such a decision. It is submitted that a court or tribunal cannot validate an administrative act that was never undertaken by the person upon whom Parliament vested the statutory power.
24. On the merits, the Appellant submits that the Tribunal effectively rewrote the parties' insurance contract. Counsel argues that the location of risk was expressly identified in the policy as Regina Pacis Building, Menelik Road, Kilimani. It follows, according to the Appellant, that the policy did not insure property situated elsewhere and the loss occurring at Sagas Storage Facility along Thika Road fell outside the contractual cover.
25. The Appellant submits that insurance contracts are contracts of utmost good faith (uberrimae fidei), imposing upon the insured a continuing obligation to disclose every material fact that may influence the insurer's assessment of risk. The movement of the insured equipment from the declared premises to a different storage facility fundamentally altered the insured risk. The failure to disclose that relocation entitled the insurer to avoid liability.
26. Counsel argues that the Tribunal improperly shifted the burden of disclosure from the insured to the insurer by holding that the insurer ought to have undertaken further due diligence regarding the location of the risk. It is submitted that there exists no legal obligation requiring an insurer to investigate whether information supplied by the insured is correct. Rather, the duty of disclosure rests upon the insured.
27. The Appellant further contends that Clause 7.10 of the Insurance Regulatory Authority Claims Management Guidelines was misconstrued. In its view, the clause merely prevents insurers from declining claims on the basis of information that a reasonable policyholder would not ordinarily be expected to know. It does not relieve an insured from disclosing material facts such as the location of the insured property, which lies peculiarly within the insured's own knowledge.
28. Lastly, the Appellant disputes the Tribunal's finding that the 3rd Respondent acted as its agent. Counsel submits that I&M Bancassurance Intermediary Limited is an independent corporate entity regulated under the Insurance Act and cannot automatically be treated as an agent merely because it facilitated the procurement of insurance. Consequently, any information allegedly communicated to I&M Bank or to the financing institution could not be imputed to the Appellant.
The 1st Respondent's Submissions
29. The 1st Respondent submits that the appeal is devoid of merit and urges the Court to uphold both its administrative decision and the judgment of the Tribunal.
30. On jurisdiction, the 1st Respondent argues that the Appellant never challenged the competence of the Authority's decision during the complaint resolution process before the IRA. Equally, the issue was not properly pleaded in the Memorandum of Appeal before the Tribunal. Having voluntarily submitted itself to the statutory dispute resolution process, participated fully therein and thereafter appealed against the decision, the Appellant is estopped from questioning the Authority's jurisdiction after an adverse outcome.
31. It is submitted that the Tribunal correctly held that the challenge to the authority of the officer communicating the decision lacked merit. Counsel argues that the Commissioner exercises statutory functions through officers of the Authority and that the communication of the Authority's determination by an authorised officer does not invalidate the decision itself.
32. On the substantive dispute, the 1st Respondent submits that the insurer failed to undertake reasonable due diligence before underwriting the risk. It argues that insurers possess superior technical knowledge and underwriting expertise and cannot avoid liability by relying upon facts that reasonable enquiries before issuing the policy would have revealed.
33. Counsel further submits that the Appellant accepted premiums, issued the insurance policy and renewed it without conducting any inspection or verification of the insured property. Having failed to satisfy itself regarding the risk it elected to insure, the Appellant cannot subsequently rely upon its own omission as a basis for avoiding liability.
34. The 1st Respondent argues that Clause 7.10 of the Claims Management Guidelines seeks to protect policyholders against arbitrary repudiation based upon matters that insurers could reasonably have verified before issuing cover. The Tribunal therefore correctly applied the Guidelines in concluding that the insurer's failure to undertake adequate due diligence could not be visited upon the insured.
35. The 1st Respondent also supports the Tribunal's finding that the 3rd Respondent acted as the Appellant's agent in procuring the insurance policy and facilitating communication between the insurer and the insured.
The 2nd Respondent's Submissions
36. The 2nd Respondent similarly supports the judgment of the Tribunal.
37. Counsel submits that the appeal improperly invites this Court to re-evaluate factual findings that fall outside the limited appellate jurisdiction conferred by section 173(4) of the Insurance Act. Under that provision, an appeal from the Tribunal lies only on questions of law. The Tribunal's factual findings, including its assessment of the evidence regarding disclosure, due diligence and the location of the insured property, are therefore not open to reconsideration unless shown to have been founded upon an error of law.
38. The 2nd Respondent submits that throughout the process of obtaining insurance, it supplied all information requested by the financier, the 3rd Respondent and the insurer. No proposal form requiring disclosure of the storage location was ever completed by it. The insurer elected to issue cover based upon information obtained from other sources without undertaking any independent verification.
39. Counsel submits that the Appellant cannot invoke the doctrine of utmost good faith selectively while ignoring its own obligations as a professional insurer. If the physical location of the insured equipment was truly fundamental to underwriting the policy, nothing prevented the insurer from conducting a pre-insurance inspection or requesting additional information before accepting the premium.
40. It is further argued that the insurer cannot rely upon an alleged misdescription after accepting premiums, renewing the policy and remaining silent until a claim materialised. Such conduct, it is submitted, offends the principles of fairness, proportionality and good faith underpinning insurance regulation.
41. Regarding agency, the 2nd Respondent submits that the evidence demonstrates that the 3rd Respondent procured the insurance on behalf of the Appellant, issued the relevant documentation and communicated directly with the insured throughout the transaction. The Tribunal therefore correctly found that the intermediary acted as the insurer's agent in relation to the placement of the risk.
The 3rd Respondent's Submissions
42. The 3rd Respondent supports the Appellant only on the question concerning the validity of the decision made under section 204A of the Insurance Act. It submits that only the Commissioner possesses statutory authority to render an appealable determination and that the communication issued by an Assistant Manager could not lawfully constitute the Commissioner's decision.
43. However, on the issue of agency, the 3rd Respondent maintains that although it facilitated placement of the insurance cover under a service level agreement with the Appellant, it discharged all duties expected of an insurance intermediary based upon information supplied by the insured. It further contends that communications made to I&M Bank could not automatically be attributed to I&M Bancassurance Intermediary Limited, the two being distinct legal entities.
Analysis and Determination
44. Having considered the Record of Appeal, the judgment of the Tribunal, the grounds of appeal and the parties' submissions, the following issues arise for determination:-
i. Whether the decision communicated on 5 September 2023 was ultra vires section 204A of the Insurance Act.
ii. Whether the Tribunal erred in holding that the location of risk was not an express term of the insurance policy.
iii. Whether the Tribunal erred in finding that the 3rd Respondent was an agent of the Appellant
Whether the decision communicated on 5 September 2023 was ultra vires section 204A of the Insurance Act
45. The Appellant contended that the decision communicated on 5 September 2023 was ultra vires section 204A of the Insurance Act because it was signed by Ms. Isiann Masha, an Assistant Manager in the Consumer Protection Department of the 1st Respondent, rather than by the Commissioner of Insurance.
46. According to the Appellant, the statutory mandate to resolve consumer insurance disputes under Section 204A of the Insurance Act is vested exclusively in the Commissioner of Insurance. The 3rd Respondent supports this argument.
47. Conversely, the 1st and 2nd Respondents argue that the Appellant is estopped from raising this jurisdictional challenge because it failed to plead the issue in its original Memorandum of Appeal before the Tribunal, effectively blowing hot and cold (approbating and reprobating)
48. It is settled that jurisdiction flows from statute and cannot be assumed – see the decisions in Samuel Kamau Macharia & Another v Kenya Commercial Bank Ltd & 2 Others [2012] eKLR and Owners of the Motor Vessel "Lillian S" v Caltex Oil (Kenya) Ltd [1989] KLR 1 cited by the Appellant.
49. In the present case, the argument by the Appellant, however, overlooks the statutory framework establishing the 1st Respondent.
50. The Insurance Regulatory Authority is established under section 3 of the Insurance Act as a body corporate with perpetual succession and capacity to sue and be sued in its corporate name. It is the statutory regulator charged with carrying out the functions conferred upon it under the Act.
51. Section 3E provides for the appointment of the Commissioner of Insurance by the Board of the Authority. The Commissioner is the Chief Executive Officer of the Authority and is responsible for the day-to-day administration of its affairs. The Commissioner is therefore an officer of the Authority and not the Authority itself.
52. Section 3F of the Act further provides:
"The Board may appoint such secretary and other staff as may be necessary for the proper discharge of the functions of the Authority under this Act or any other written law."
53. The Appellant's position effectively invites the Court to hold that every determination made pursuant to section 204A must be personally authored and executed by the Commissioner.
54. I am unable to accept that interpretation.
55. The Authority is a statutory corporation. Like every statutory body, it acts through officers appointed under the enabling legislation. Parliament did not create a one-person regulator. To the contrary, as has already been established, section 3F expressly contemplates the appointment of officers and staff to facilitate the discharge of the Authority's statutory mandate.
56. Nothing in section 204A expressly prohibits officers of the Authority from undertaking complaint resolution functions on behalf of the Authority and by extension, the Commissioner. Equally, nothing in the record demonstrates that Ms. Masha acted outside the institutional authority of the Insurance Regulatory Authority. She was not a stranger to the process but an officer working within the Consumer Protection Department of the Authority.
57. In my view, a proper interpretation of sections 3, 3E and 3F of the Insurance Act is that the Authority (and by extension, the Commissioner) may discharge its statutory mandate through officers appointed under the Act unless the legislation expressly requires personal exercise of the power by a particular office holder. In the present case, no such inhibition has been demonstrated.
58. Accordingly, I find that the determination communicated on 5 September 2023 was not ultra vires merely because it was communicated by Ms. Isiann Masha rather than directly by the Commissioner. The Tribunal therefore possessed jurisdiction to entertain the appeal before it.
59. Grounds 1 to 5 of the Memorandum of Appeal consequently fail.
Whether the Tribunal erred in holding that the location of risk was not an express term of the insurance policy
60. The Appellant further contended that the Tribunal rewrote the parties' contract by holding that the location of the insured property was not an express term of the insurance policy. It submits that the policy expressly identified Regina Pacis Building, Menelik Road, Kilimani, as the insured premises, whereas the damaged equipment was stored behind Sagas Hotel along Thika Road. According to the Appellant, the loss therefore fell outside the scope of the cover.
61. It is trite that a court cannot rewrite a contract for parties. The duty of the court is to give effect to the bargain freely entered into by the parties unless the contract is illegal, unconscionable or otherwise unenforceable. The Court of Appeal reiterated this principle in National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [2001] eKLR, where it held that courts have no jurisdiction to rewrite contracts merely because one party subsequently considers the bargain to be unfair.
62. Equally settled is the principle that insurance contracts are bound by the doctrine of utmost good faith (uberrimae fidei), placing a stringent duty on the proposer to disclose every material fact within their knowledge that would influence a prudent underwriter in assessing the risk or setting the premium. In Co-operative Insurance Company Ltd v. David Wachira Wambugu [2010] KECA 481 (KLR), it was reaffirmed that the failure to disclose an underlying material renders a policy voidable at the option of the insurer.
63. However, the application of the uberrimae fidei doctrine is not a one-way street; it must be viewed alongside the objective behavior of the contracting parties. The uncontroverted evidence in the present case shows that the 2nd Respondent was never issued, nor required to complete, a standard insurance proposal form at the inception or renewal of the cover.
64. If the location of the equipment was truly regarded by the insurer as a matter central to the assessment of risk, one would reasonably expect the insurer to require such information expressly during the proposal and underwriting stages.
65. The Appellant did not do so.
66. Instead, it relied upon third-party information (including data from the Kenya Revenue Authority). Having elected to adopt that approach, it cannot fairly transfer the consequence of that omission to the insured.
67. Consequently, I therefore find that the Tribunal correctly concluded that the 2nd Respondent could not reasonably be faulted for failing to notify the Appellant of a change in information which the Appellant itself had neither sought nor demonstrated to the insured was material to the cover.
68. Clause 7.10 of the Insurance Regulatory Authority Claims Management Guidelines explicitly debars an insurer from declining a claim on grounds of non-disclosure of material facts which a policyholder could not reasonably be expected to have known.
69. In this case, since the insurer and its intermediary failed to design an application process or ask explicit, direct questions regarding the physical location of the printing assets, the 2nd Respondent could not have reasonably known that its statutory KRA PIN address—automatically extracted by the intermediary—was being treated as a strict geographic restriction for a property storage cover.
70. This ground therefore fails.
Whether the Tribunal erred in finding that the 3rd Respondent was an agent of the Appellant
71. The Appellant submitted that the Tribunal erred in finding that the 3rd Respondent acted as its agent, arguing that the 3rd Respondent is an independent licensed insurance intermediary and a separate legal entity from I&M Bank Limited.
72. I note from the record of appeal that the Service Level Agreement dated 1 January 2015 formed part of the material before the Tribunal. The agreement expressly authorised the 3rd Respondent to solicit and procure insurance business on behalf of the Appellant.
73. This evidence therefore supports the Tribunal's finding that an agency relationship existed between the Appellant and the 3rd Respondent.
74. While I accept the 3rd Respondent's submission that I&M Bank Limited and I&M Bancassurance Intermediary Limited are separate legal entities, that distinction does not negate the agency relationship established by the Service Level Agreement itself.
75. Consequently, find no error in the Tribunal’s conclusion on this point.
76. Again, this ground also fails.
Disposition
77. The upshot of the foregoing is that the appeal dated 10 July 2024 is dismissed.
78. The judgment of the Insurance Appeals Tribunal delivered on 11 June 2024 in Insurance Appeals Tribunal Appeal No. 7 of 2023 is hereby affirmed.
79. The Appellant shall bear the costs of this appeal to the Respondents.
80. It is so ordered.
DATED, SIGNED, AND DELIVERED AT NAIROBI
THIS 30TH DAY OF JUNE 2026
HON. MR. JUSTICE MOSES ADO
Judge of the High Court
In the Presence of:
Moses C/A
.………………for the Appellant
……………for the 1st Respondent
………………….for the 2nd Respondent
………………..for the 3rd Respondent
1. This appeal arises from the judgment of the Insurance Appeals Tribunal ("the Tribunal") delivered on 11 June 2024 dismissing the Appellant's appeal against the decision of the Insurance Regulatory Authority ("the IRA") communicated on 5 September 2023. The Tribunal upheld the decision directing the Appellant to rescind its repudiation of the 2nd Respondent's insurance claim and settle the same under Policy No. 01/01/024/0657/2022.
2. The dispute concerns the repudiation of a material damage claim following water damage to electronic equipment insured under the Appellant's policy. The Appellant declined liability on the basis that the damaged equipment was located at premises different from those specified in the policy. The IRA found that the repudiation was unjustified and directed the Appellant to reconsider and settle the claim. The Tribunal affirmed that determination, prompting this appeal.
3. The Memorandum of Appeal raises eleven grounds which, although framed separately, challenge the Tribunal's judgment on three principal fronts.
4. First, the Appellant contends that the decision communicated by the IRA was ultra vires because it was made by an Assistant Manager rather than the Commissioner of Insurance as contemplated under section 204A of the Insurance Act.
5. Secondly, it argues that the Tribunal fundamentally erred in interpreting the insurance contract by disregarding the location of risk as an express and material term of the policy, thereby shifting the insured's duty of disclosure to the insurer.
6. Thirdly, the Appellant contests the Tribunal's finding that the 3rd Respondent acted as its agent and disputes the application of the Insurance Regulatory Authority Claims Management Guidelines.
Background
7. The material facts are largely uncontested.
8. The 2nd Respondent obtained from the Appellant an Electronic Equipment Insurance Policy through the 3rd Respondent, an insurance intermediary associated with I & M Bank. The policy insured electronic equipment with a declared value of Kshs. 25,812,423.
9. During May 2023, following heavy rainfall, electronic equipment belonging to the 2nd Respondent sustained water damage while stored in premises situated behind Sagas Hotel along Thika Road. The loss was reported to the Appellant through the 3rd Respondent and a claim for indemnity lodged.
10. Upon investigation, the Appellant concluded that the damaged equipment was not situated at the location described in the insurance policy. Whereas the policy indicated the insured premises as Regina Pacis Building, Menelik Road, Kilimani, the loss occurred at different premises. By a letter dated 5 July 2023, the Appellant repudiated liability on the ground that the risk that materialised fell outside the scope of cover.
11. Aggrieved by the repudiation, the 2nd Respondent lodged a complaint before the Insurance Regulatory Authority pursuant to section 204A of the Insurance Act.
12. After receiving responses from the parties and reviewing the documentation placed before it, the Authority communicated its decision on 5 September 2023, directing the Appellant to rescind its repudiation and settle the claim within fourteen days.
13. Dissatisfied with that determination, the Appellant lodged Insurance Appeals Tribunal Appeal No. 7 of 2023.
Proceedings before the Tribunal
14. Before the Tribunal, the Appellant maintained that the Authority had exceeded its statutory mandate by compelling payment under a policy that did not cover the loss. It contended that the location of risk constituted an express contractual term, that the insured had breached its duty of utmost good faith by failing to disclose the relocation of the insured equipment, and that the Tribunal could not rewrite the parties' contract.
15. The Appellant further argued that the decision communicated by Ms. Isiann Masha, an Assistant Manager in the Consumer Protection Department of the IRA, was a nullity because section 204A vests decision-making authority exclusively in the Commissioner of Insurance.
16. The 1st Respondent maintained that it lawfully exercised its statutory dispute resolution mandate under section 204A of the Insurance Act and that the Appellant had not challenged the Authority's jurisdiction during the administrative proceedings. It further maintained that the insurer had failed to undertake adequate due diligence before underwriting the risk and could not avoid liability by relying on facts that reasonable investigation would have disclosed.
17. The 2nd Respondent contended that it had disclosed all information requested during the proposal process, that no proposal form requiring disclosure of the storage location had been completed, and that the Appellant and the 3rd Respondent relied upon information obtained from the financing bank without undertaking any independent verification. It further argued that the insurer could not rely on technicalities after accepting premiums and issuing cover.
18. The 3rd Respondent maintained that it discharged its obligations as an insurance intermediary based on information supplied by the insured but equally argued that the communication issued by the Assistant Manager was not a decision contemplated under section 204A of the Insurance Act.
19. Upon considering the evidence and submissions, the Tribunal dismissed the appeal, upheld the Authority's determination and directed that each party bear its own costs.
Grounds of Appeal
20. The Appellant challenges the judgment on eleven grounds which may conveniently be condensed into the following issues:
i. Whether the Tribunal erred in holding that the decision of the Insurance Regulatory Authority was valid notwithstanding that it was communicated by an Assistant Manager.
ii. Whether the Tribunal misdirected itself regarding the insured's duty of disclosure, the doctrine of utmost good faith and the location of risk under the insurance contract.
iii. Whether the Tribunal improperly imposed a duty of due diligence upon the insurer contrary to the contractual allocation of obligations.
iv. Whether the Tribunal misapplied Clause 7.10 of the Insurance Regulatory Authority Claims Management Guidelines.
v. Whether the Tribunal erred in holding that the 3rd Respondent acted as an agent of the Appellant.
The Appellant's Submissions
21. The Appellant submits that the Tribunal fundamentally misdirected itself in law by upholding what was, in essence, a non-existent administrative decision. Counsel argues that section 204A of the Insurance Act vests the statutory power to determine disputes exclusively in the Commissioner of Insurance. Since the impugned communication dated 5 September 2023 was authored and communicated by Ms. Isiann Masha, an Assistant Manager in the Consumer Protection Department, and not by the Commissioner, it is submitted that the decision was ultra vires, null and void ab initio.
22. The Appellant further submits that the Tribunal rendered contradictory findings on jurisdiction. On one hand, it stated that it would not address the issue of ultra vires any further, yet on the other hand proceeded to hold that the decision of the Respondent was not ultra vires. Counsel argues that the Tribunal thereby failed to determine a jurisdictional question which went to the root of its mandate.
23. The Appellant further argues that the Tribunal improperly upheld a decision described in its final orders as the "decision of the Commissioner" despite there being no evidence that the Commissioner ever rendered such a decision. It is submitted that a court or tribunal cannot validate an administrative act that was never undertaken by the person upon whom Parliament vested the statutory power.
24. On the merits, the Appellant submits that the Tribunal effectively rewrote the parties' insurance contract. Counsel argues that the location of risk was expressly identified in the policy as Regina Pacis Building, Menelik Road, Kilimani. It follows, according to the Appellant, that the policy did not insure property situated elsewhere and the loss occurring at Sagas Storage Facility along Thika Road fell outside the contractual cover.
25. The Appellant submits that insurance contracts are contracts of utmost good faith (uberrimae fidei), imposing upon the insured a continuing obligation to disclose every material fact that may influence the insurer's assessment of risk. The movement of the insured equipment from the declared premises to a different storage facility fundamentally altered the insured risk. The failure to disclose that relocation entitled the insurer to avoid liability.
26. Counsel argues that the Tribunal improperly shifted the burden of disclosure from the insured to the insurer by holding that the insurer ought to have undertaken further due diligence regarding the location of the risk. It is submitted that there exists no legal obligation requiring an insurer to investigate whether information supplied by the insured is correct. Rather, the duty of disclosure rests upon the insured.
27. The Appellant further contends that Clause 7.10 of the Insurance Regulatory Authority Claims Management Guidelines was misconstrued. In its view, the clause merely prevents insurers from declining claims on the basis of information that a reasonable policyholder would not ordinarily be expected to know. It does not relieve an insured from disclosing material facts such as the location of the insured property, which lies peculiarly within the insured's own knowledge.
28. Lastly, the Appellant disputes the Tribunal's finding that the 3rd Respondent acted as its agent. Counsel submits that I&M Bancassurance Intermediary Limited is an independent corporate entity regulated under the Insurance Act and cannot automatically be treated as an agent merely because it facilitated the procurement of insurance. Consequently, any information allegedly communicated to I&M Bank or to the financing institution could not be imputed to the Appellant.
The 1st Respondent's Submissions
29. The 1st Respondent submits that the appeal is devoid of merit and urges the Court to uphold both its administrative decision and the judgment of the Tribunal.
30. On jurisdiction, the 1st Respondent argues that the Appellant never challenged the competence of the Authority's decision during the complaint resolution process before the IRA. Equally, the issue was not properly pleaded in the Memorandum of Appeal before the Tribunal. Having voluntarily submitted itself to the statutory dispute resolution process, participated fully therein and thereafter appealed against the decision, the Appellant is estopped from questioning the Authority's jurisdiction after an adverse outcome.
31. It is submitted that the Tribunal correctly held that the challenge to the authority of the officer communicating the decision lacked merit. Counsel argues that the Commissioner exercises statutory functions through officers of the Authority and that the communication of the Authority's determination by an authorised officer does not invalidate the decision itself.
32. On the substantive dispute, the 1st Respondent submits that the insurer failed to undertake reasonable due diligence before underwriting the risk. It argues that insurers possess superior technical knowledge and underwriting expertise and cannot avoid liability by relying upon facts that reasonable enquiries before issuing the policy would have revealed.
33. Counsel further submits that the Appellant accepted premiums, issued the insurance policy and renewed it without conducting any inspection or verification of the insured property. Having failed to satisfy itself regarding the risk it elected to insure, the Appellant cannot subsequently rely upon its own omission as a basis for avoiding liability.
34. The 1st Respondent argues that Clause 7.10 of the Claims Management Guidelines seeks to protect policyholders against arbitrary repudiation based upon matters that insurers could reasonably have verified before issuing cover. The Tribunal therefore correctly applied the Guidelines in concluding that the insurer's failure to undertake adequate due diligence could not be visited upon the insured.
35. The 1st Respondent also supports the Tribunal's finding that the 3rd Respondent acted as the Appellant's agent in procuring the insurance policy and facilitating communication between the insurer and the insured.
The 2nd Respondent's Submissions
36. The 2nd Respondent similarly supports the judgment of the Tribunal.
37. Counsel submits that the appeal improperly invites this Court to re-evaluate factual findings that fall outside the limited appellate jurisdiction conferred by section 173(4) of the Insurance Act. Under that provision, an appeal from the Tribunal lies only on questions of law. The Tribunal's factual findings, including its assessment of the evidence regarding disclosure, due diligence and the location of the insured property, are therefore not open to reconsideration unless shown to have been founded upon an error of law.
38. The 2nd Respondent submits that throughout the process of obtaining insurance, it supplied all information requested by the financier, the 3rd Respondent and the insurer. No proposal form requiring disclosure of the storage location was ever completed by it. The insurer elected to issue cover based upon information obtained from other sources without undertaking any independent verification.
39. Counsel submits that the Appellant cannot invoke the doctrine of utmost good faith selectively while ignoring its own obligations as a professional insurer. If the physical location of the insured equipment was truly fundamental to underwriting the policy, nothing prevented the insurer from conducting a pre-insurance inspection or requesting additional information before accepting the premium.
40. It is further argued that the insurer cannot rely upon an alleged misdescription after accepting premiums, renewing the policy and remaining silent until a claim materialised. Such conduct, it is submitted, offends the principles of fairness, proportionality and good faith underpinning insurance regulation.
41. Regarding agency, the 2nd Respondent submits that the evidence demonstrates that the 3rd Respondent procured the insurance on behalf of the Appellant, issued the relevant documentation and communicated directly with the insured throughout the transaction. The Tribunal therefore correctly found that the intermediary acted as the insurer's agent in relation to the placement of the risk.
The 3rd Respondent's Submissions
42. The 3rd Respondent supports the Appellant only on the question concerning the validity of the decision made under section 204A of the Insurance Act. It submits that only the Commissioner possesses statutory authority to render an appealable determination and that the communication issued by an Assistant Manager could not lawfully constitute the Commissioner's decision.
43. However, on the issue of agency, the 3rd Respondent maintains that although it facilitated placement of the insurance cover under a service level agreement with the Appellant, it discharged all duties expected of an insurance intermediary based upon information supplied by the insured. It further contends that communications made to I&M Bank could not automatically be attributed to I&M Bancassurance Intermediary Limited, the two being distinct legal entities.
Analysis and Determination
44. Having considered the Record of Appeal, the judgment of the Tribunal, the grounds of appeal and the parties' submissions, the following issues arise for determination:-
i. Whether the decision communicated on 5 September 2023 was ultra vires section 204A of the Insurance Act.
ii. Whether the Tribunal erred in holding that the location of risk was not an express term of the insurance policy.
iii. Whether the Tribunal erred in finding that the 3rd Respondent was an agent of the Appellant
Whether the decision communicated on 5 September 2023 was ultra vires section 204A of the Insurance Act
45. The Appellant contended that the decision communicated on 5 September 2023 was ultra vires section 204A of the Insurance Act because it was signed by Ms. Isiann Masha, an Assistant Manager in the Consumer Protection Department of the 1st Respondent, rather than by the Commissioner of Insurance.
46. According to the Appellant, the statutory mandate to resolve consumer insurance disputes under Section 204A of the Insurance Act is vested exclusively in the Commissioner of Insurance. The 3rd Respondent supports this argument.
47. Conversely, the 1st and 2nd Respondents argue that the Appellant is estopped from raising this jurisdictional challenge because it failed to plead the issue in its original Memorandum of Appeal before the Tribunal, effectively blowing hot and cold (approbating and reprobating)
48. It is settled that jurisdiction flows from statute and cannot be assumed – see the decisions in Samuel Kamau Macharia & Another v Kenya Commercial Bank Ltd & 2 Others [2012] eKLR and Owners of the Motor Vessel "Lillian S" v Caltex Oil (Kenya) Ltd [1989] KLR 1 cited by the Appellant.
49. In the present case, the argument by the Appellant, however, overlooks the statutory framework establishing the 1st Respondent.
50. The Insurance Regulatory Authority is established under section 3 of the Insurance Act as a body corporate with perpetual succession and capacity to sue and be sued in its corporate name. It is the statutory regulator charged with carrying out the functions conferred upon it under the Act.
51. Section 3E provides for the appointment of the Commissioner of Insurance by the Board of the Authority. The Commissioner is the Chief Executive Officer of the Authority and is responsible for the day-to-day administration of its affairs. The Commissioner is therefore an officer of the Authority and not the Authority itself.
52. Section 3F of the Act further provides:
"The Board may appoint such secretary and other staff as may be necessary for the proper discharge of the functions of the Authority under this Act or any other written law."
53. The Appellant's position effectively invites the Court to hold that every determination made pursuant to section 204A must be personally authored and executed by the Commissioner.
54. I am unable to accept that interpretation.
55. The Authority is a statutory corporation. Like every statutory body, it acts through officers appointed under the enabling legislation. Parliament did not create a one-person regulator. To the contrary, as has already been established, section 3F expressly contemplates the appointment of officers and staff to facilitate the discharge of the Authority's statutory mandate.
56. Nothing in section 204A expressly prohibits officers of the Authority from undertaking complaint resolution functions on behalf of the Authority and by extension, the Commissioner. Equally, nothing in the record demonstrates that Ms. Masha acted outside the institutional authority of the Insurance Regulatory Authority. She was not a stranger to the process but an officer working within the Consumer Protection Department of the Authority.
57. In my view, a proper interpretation of sections 3, 3E and 3F of the Insurance Act is that the Authority (and by extension, the Commissioner) may discharge its statutory mandate through officers appointed under the Act unless the legislation expressly requires personal exercise of the power by a particular office holder. In the present case, no such inhibition has been demonstrated.
58. Accordingly, I find that the determination communicated on 5 September 2023 was not ultra vires merely because it was communicated by Ms. Isiann Masha rather than directly by the Commissioner. The Tribunal therefore possessed jurisdiction to entertain the appeal before it.
59. Grounds 1 to 5 of the Memorandum of Appeal consequently fail.
Whether the Tribunal erred in holding that the location of risk was not an express term of the insurance policy
60. The Appellant further contended that the Tribunal rewrote the parties' contract by holding that the location of the insured property was not an express term of the insurance policy. It submits that the policy expressly identified Regina Pacis Building, Menelik Road, Kilimani, as the insured premises, whereas the damaged equipment was stored behind Sagas Hotel along Thika Road. According to the Appellant, the loss therefore fell outside the scope of the cover.
61. It is trite that a court cannot rewrite a contract for parties. The duty of the court is to give effect to the bargain freely entered into by the parties unless the contract is illegal, unconscionable or otherwise unenforceable. The Court of Appeal reiterated this principle in National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [2001] eKLR, where it held that courts have no jurisdiction to rewrite contracts merely because one party subsequently considers the bargain to be unfair.
62. Equally settled is the principle that insurance contracts are bound by the doctrine of utmost good faith (uberrimae fidei), placing a stringent duty on the proposer to disclose every material fact within their knowledge that would influence a prudent underwriter in assessing the risk or setting the premium. In Co-operative Insurance Company Ltd v. David Wachira Wambugu [2010] KECA 481 (KLR), it was reaffirmed that the failure to disclose an underlying material renders a policy voidable at the option of the insurer.
63. However, the application of the uberrimae fidei doctrine is not a one-way street; it must be viewed alongside the objective behavior of the contracting parties. The uncontroverted evidence in the present case shows that the 2nd Respondent was never issued, nor required to complete, a standard insurance proposal form at the inception or renewal of the cover.
64. If the location of the equipment was truly regarded by the insurer as a matter central to the assessment of risk, one would reasonably expect the insurer to require such information expressly during the proposal and underwriting stages.
65. The Appellant did not do so.
66. Instead, it relied upon third-party information (including data from the Kenya Revenue Authority). Having elected to adopt that approach, it cannot fairly transfer the consequence of that omission to the insured.
67. Consequently, I therefore find that the Tribunal correctly concluded that the 2nd Respondent could not reasonably be faulted for failing to notify the Appellant of a change in information which the Appellant itself had neither sought nor demonstrated to the insured was material to the cover.
68. Clause 7.10 of the Insurance Regulatory Authority Claims Management Guidelines explicitly debars an insurer from declining a claim on grounds of non-disclosure of material facts which a policyholder could not reasonably be expected to have known.
69. In this case, since the insurer and its intermediary failed to design an application process or ask explicit, direct questions regarding the physical location of the printing assets, the 2nd Respondent could not have reasonably known that its statutory KRA PIN address—automatically extracted by the intermediary—was being treated as a strict geographic restriction for a property storage cover.
70. This ground therefore fails.
Whether the Tribunal erred in finding that the 3rd Respondent was an agent of the Appellant
71. The Appellant submitted that the Tribunal erred in finding that the 3rd Respondent acted as its agent, arguing that the 3rd Respondent is an independent licensed insurance intermediary and a separate legal entity from I&M Bank Limited.
72. I note from the record of appeal that the Service Level Agreement dated 1 January 2015 formed part of the material before the Tribunal. The agreement expressly authorised the 3rd Respondent to solicit and procure insurance business on behalf of the Appellant.
73. This evidence therefore supports the Tribunal's finding that an agency relationship existed between the Appellant and the 3rd Respondent.
74. While I accept the 3rd Respondent's submission that I&M Bank Limited and I&M Bancassurance Intermediary Limited are separate legal entities, that distinction does not negate the agency relationship established by the Service Level Agreement itself.
75. Consequently, find no error in the Tribunal’s conclusion on this point.
76. Again, this ground also fails.
Disposition
77. The upshot of the foregoing is that the appeal dated 10 July 2024 is dismissed.
78. The judgment of the Insurance Appeals Tribunal delivered on 11 June 2024 in Insurance Appeals Tribunal Appeal No. 7 of 2023 is hereby affirmed.
79. The Appellant shall bear the costs of this appeal to the Respondents.
80. It is so ordered.
DATED, SIGNED, AND DELIVERED AT NAIROBI
THIS 30TH DAY OF JUNE 2026
HON. MR. JUSTICE MOSES ADO
Judge of the High Court
In the Presence of:
Moses C/A
.………………for the Appellant
……………for the 1st Respondent
………………….for the 2nd Respondent
………………..for the 3rd Respondent