WHO SHOULD SUPPLY MOTOR VEHICLE SPARE PARTS FOR REPAIR PURPOSES?
The Insurance Motor Industry and the Motor Vehicle repairers can be likened to brothers in business. The relationship is such that each needs the other to be able to meet their promises to their investors and to the public to which they offer services in their respective capacities.
The vehicle repairers in an effort to streamline operations came together under an umbrella body called Kenya Motor Repairers Association (KEMRA). This association is aimed at protection and promotion of members business through advocacy and instilling professionalism. It claims inspected and accredited motor repair centres and its vision is promotion of efficiency, effectiveness, safety, functionality and satisfaction.
The insurance industry also has an umbrella body called Association Of Kenya Insurers (AKI) which according to its website, has undergone metamorphosis since 1960s when it had various independent industry associations including Motor Association of East Africa .In 1987 the current association AKI was registered as a society being a non profit, consultative and advisory body . It purports to champion insurance growth and excellence; professionalism is one of its corporate values. The members are governed by a constitution with a Governance structure that executes its decisions through various committees the motor committee being one of them.
Insurers are risk underwriters who manage the premiums collected from the insuring public so that enterprising members of society can go about their businesses without the burden of worrying about uncertainties of life. Motor vehicle risks in Kenya are always on an upward spiral as a result of a vibrant economy ; a consequence of a people with an uncommon enterprising spirit. The insurance the people want is one whose premiums are affordable and so well managed that if a risk occurs, indemnity is assured and there is timely resolution of all pre settlement requirements.
In motor insurance, the insurers depend on expertise from different fields; examples being, insurance intermediaries,(agents and brokers) who sell insurance and explain what is covered plus recommending to the customer the Principal (insurer) who can underwrite the risk, motor vehicle assessors and repairers to ensure that the damage is assessed and handled as per the agreed terms in the policy, barring any disqualifying factors. The insuring public, by transferring the risk to the experts in risk management, has legitimate expectations.
The insurance industry has experienced some very low moments when some Insurers with high motor portfolio collapsed, with only one managing a comeback but still performing dismally.
The reaction to bad incidents affecting some insurers has to some extent been a lot of finger pointing. Unfortunately this has resulted in sour relationships with crucial business partners;especially when perceived partner malpractices are managed by implementing policies that are designed to tame the culprits. On the other hand,the partners insist that insurers should tame inside out by adhering to clearly set out principles that recognise professionalism and Insurance Laws and Regulations.
To a mediator this is an Ideal situation for intervention and requires the skills that can help both parties to come to the table,really listen to each other and view the situation differently as a common challenge for mutually satisfactory win-win solutions. The spare parts misunderstanding is ideal as it has identifiable parties and each side is able to articulate its concerns.
From the objectives of both AKI & KEMRA, it is clear that they agree on so many things a fact a mediator can capitalise on. Common stated objectives and ideals provide the perfect reason to believe these particular disputants can cooperate and be them against the problem.
The interests of both are really easy to pinpoint; the repairers want to offer quality services to clients like the insurers and insurers want professionalism that engenders cost effective services to the customers.
The misunderstanding seems to have been borne out of mistrust which at times originates from wrong attitude to the issues especially, viewing problems as insurmountable. The mediator’s role is very good at digging up sources of mistrust which often turn out to be mere perceptions.
What is of particular significance in the spares debate, is the fact that there are other interested parties with a keen interest in seeing the issues resolved. This problem goes to safety of motor vehicles. Repairs not done up to standard do not just affect the insured party, but also the other road users who can become collateral damage. A vehicle repaired under acrimonious circumstances is very likely to fall short of being returned to a reliable pre accident condition. The Government whose mandate it is to ensure safety, would be an interested party especially through the ministry of transport, and infrastructure which for this particular purpose works through the National Transport & Safety Authority whose functions among others is national road safety management, motor vehicle inspection and maintenance of security on the roads.
(from Nairobi News .nation.co.ke)
If either of the warring parties were told by the public that spare parts issues could be a factor in an accident like the above, they would most likely react with indignant denials, yet if you analyse causation of past incidents, it is very possible.
It is therefore my view, that in a mediation, looking at options in this kind of case would take on a wider scope and even pushing legislative intervention would avail an avenue to workable solutions.
The grisly images like the above which are frequent in Kenya media would also be an invisible catalyst to drive the parties in reaching the right solutions.
Why have I suggested Mediation to end such a conflict:
- The parties have an interdependent relationship.
- These are business people who have little time to waste either in litigation or in prolonged conflict.
- There are both service industries under public scrutiny and both are crucial services.
- There is power balance between the parties.
- There are opportunities to be resourceful and together build something better and mutually beneficial.
- There is room to help each other in better management of their respective industries which would minimise loss and maximise profits on either side.
What would be the suitable mediator position?
- Be neutral, understand the dynamics of the dispute and facilitate the process.
- Endeavour to be trusted and acceptable to both sides.
- Be capable of letting parties clearly bring out the interests underneath the party positions and also to establish common interests.
- Be good with directing proper internal reflection and minimising emotional outbursts.
- Be skilled at nudges that are designed to let each admit to its contribution to the dispute.
- Be good at reality checking and guiding parties to offering viable options.
- Validate both sides outlook and have them appreciate how much good they can do through consensus.
- Appreciate this cannot be resolved in one day sitting and that it may require a lot of innovation from each side and from the mediator.
Unlike dealing with 2 disputants, the mediator has to appreciate these are two powerful industries which are also regulated.At the end of all the posturing and wish listing, the parties should be referred to their legal advisers to get clarity on some issues.
The relevant legislation which touches specifically on the issue at hand is the Consumer Protection Act No. 26 of 2012 Sections 44 to 52. The wordings in that section seem to have had the issues between Insurers and motor vehicle repairers in contemplation. The entire section is titled ” Repairs to Motor Vehicles and Other Goods”. It may not be addressing all the issues to this dispute, but maybe it does give guidelines on how to address the issue of repairs and spare parts. Section 44 definitely addresses repair fee, but I am more interested in the repairer warranty sections:
Warranty for vehicles
(1) On the repair of a vehicle, every repairer shall be deemed to warrant all
new or reconditioned parts installed and the labour required to install them for a minimum of ninety days or five thousand kilometres, whichever comes first, or for such greater minimum as may be prescribed.
(2) The warranty in subsection (1) is in addition to the deemed and implied
conditions and warranties set out in section 5.
(3) The person having charge of a vehicle that becomes inoperable or unsafe
to drive because of the failure or inadequacy of work or repairs to which a warranty under this section applies may, when it is not reasonable to return the vehicle to the original repairer, have the failure or inadequacy repaired at the closest facility available for the work or repairs.
(4) When work or repairs are made under subsection (3), the person entitled
to a warranty under this section is entitled to recover from the original repairer the original cost of the work or repairs and reasonable towing charges.
(5) A consumer who subjects any vehicle part to misuse or abuse is not entitled
to the benefit of the warranty on that part.
(6) No repairer shall refuse to reimburse a consumer because of the operation
of subsection (5) unless the repairer has reasonable grounds to believe that the
part under warranty was subjected to misuse or abuse.
(7) A consumer who is seeking reimbursement under this section shall return,
upon the request and at the expense of the original repairer, the defective parts to the original repairer unless, in the circumstances, it is not reasonably possible for the consumer to do so.
(8) An original repairer who is required to make a payment under this section
is entitled to recover from the supplier of a defective part any amount paid to the consumer under subsection (4).
The issue in dispute between insurers and repairers is on who provides the spare parts. Some insurers have started sourcing spares directly from parts suppliers and contracting the repairers for labour only. Upon reading the provisions of the law above, there seems to be an intention, to put the responsibility of guaranteeing repairs and the quality of spare parts used on the repairers. This section would definitely protect the insurers on the issue of repairs and section 46 does protect on the issue of charges.
When this section is read together with section 5(3) of the same Act which is reproduced here below, then it makes me wonder whether motor repairer labour agreements only are an option at all.
Quality of goods and services
(3) Any provision, whether part of the consumer agreement or not, that purports
to negate or vary any implied condition or warranty under the Sale of Goods Act
(Cap. 31) or any condition or warranty under this Act is void.
(4) If a term or acknowledgement referenced in subsection (3) is a term of
the agreement, it is severable from the agreement and shall not be evidence of
circumstances showing intent that the deemed or implied warranty or condition
does not apply.
The relevant part in the above states that any provision in the agreement that purports to negate any condition or warranty under the Consumer Protection Act is void. So when Insurers buy spare parts and give to the repairers, the repairers cannot give a valid guarantee of the quality of spare parts fitted in a vehicle. If such guarantee cannot be given, then it would negate the whole of section 51 of the Act cited above.
That could be the guidance the lawyers would give. The only problem is that winning a legal score does not end a conflict; we would therefore go back to the mediator to help parties seek solutions. The solutions would depend among other things, on the facts, worries and apprehensions identified plus weaknesses or strengths displayed in the process. The mediation process seeks to balance positions and also to address each party’s interests by engineering to have each side see the situation from the other’s side.
All issues are tabled by the parties and not the mediator, if the debate is on mark-ups by the garages or poor quality of parts supplied through the insurers, all has to be stated by the actual parties and not lawyers or mediators.
I refer back to where I discussed other stakeholders and Government being one of them through its relevant institutions.
One bone of contention is that fixed prices/premiums are affected by the Competition Act of Kenya. This seems to have an overall negative effect on the ability of AKI to standardise the terms of players in the insurance industry .
The competition authority under section 3(d ) in objects is to protect consumers.
Whereas section 21 (1) prohibits Restrictive Trade practices which among other things are such acts as would lessen competition in Goods and Services, together the insurers and business partners can lobby for exemption under section D of the part on restrictive practices. The reasons would probably be that it is in the interests of the consumers of insurance services and in harmony with objective under section 3(d) of the Competition Act which is consumer protection.
Again, together with all stakeholders, the disputants can lobby to have Government enforce membership to the lead Associations in the dispute so that all vehicle repairers can be members of KEMRA if they wish to be providers of insurance services. This would serve the insurance industry in that, the officials on both sides can have fruitful continuous discourse with each other. Both parties would be able to promote professionalism and maintain the highest standards which would be a marketing point for both sides.
The Matatu industry sets a precedent where Government intervened to force membership to Saccos in order to qualify to operate in public service vehicle arena.The important consideration from Government side was the public.
The current situation is really not serving either side and it is hurting the consumers of their respective services.