Public Service Vehicles might hike fares following the new insurance premiums that were imposed by their insurance company.
Matatu Welfare Association chairman Dickson Mbugua said 15 per cent hike in insurance premiums would hurt the industry, forcing matatus to hike fares to cover the increased cost of operations.
“The rates are ambiguous and unreasonable," he said.
The 15 per cent increased premiums were to come into force on December 1.
The matatus' two insurance firms—Invesco Assurance and Direct Line Assurance—said the increase in insurance cost would help reduce number of accidents.
But the Matatu Welfare Association protested against the move and has urged relevant stakeholders to intervene and stop effecting the rates.
Mbugua said that before the announced 15 per cent hike, the rates were already high and increasing it would only lead to a crisis in the matatu industry.
“A 33-seater matatu pays around Sh15,000 for premiums. But with the 15 per cent hike it may go up to Sh20,000 per month and that is a hefty increase on one item alone,” he said.
But the insurance companies, which are owned by the Matatu Owners Association, said teh increased premiums will benefit the industry. The rates will ensure saccos adhere to strict traffic rules and avoid accidents that have cost the insurance companies a lot of money, the association says.
MOA chief executive Wambugu Kanoro said that well-operated matatu saccos, with fewer claims, would be offered insurance discounts of up to 50 per cent.
The discount will only be applicable to matatu owners who do not make a claim within a calendar year.