Consolidated Bank has sued Jubilee Insurance for failing to honour terms of a contract they both entered in 2016.
According to court documents seen by the Star, the lender is seeking Sh87.89 million owed to them by the insurer.
The documents reveal that one Athman Mohamed used his life policy cover from Jubilee insurance as security to obtain a Sh95million loan facility from the bank. The loan was followed by a Sh5 million overdraft.
Among the requirements stipulated in the policy was that the lender was mandated to make payments of annual premium to Jubilee insurance on behalf of Mohamed.
“The various facilities taken out by Mohammed were secured by way of joint administration of his fleet of motor vehicles...in addition to a life assurance cover provided under the Group Mortgage protection policy executed by Jubilee insurance and Mohamed on January, 28,2016,” Gumbo and Associates advocates, representing the bank, said.
However, Mohamed died in July 2017, nine months to the expiry of his assurance cover that was renewed in March 2017. Upon his demise, Consolidated Bank lodged a claim against Jubilee seeking Sh87.89 million being outstanding amounts owed to them by the policy holder.
Despite seeking millions, court documents reveal that Jubilee insurance only forwarded Sh100,000 to the bank as the late Mohammed’s last expense payment. This was done three days after his death.
Since then, the bank has confirmed sending at least five letters to the insurer only for them to deny liability for the payment on basis that the security extended to Mustafa has been rendered null and void.
“ This is on account of the deceased alleged deliberate, willful misrepresentation and non-disclosure,” the documents show.
The non-disclosure was that Mustafa failed to disclose that he was suffering from a terminal illness. His death certificate reveals that he died of chronic Kidney disease.
In the suit against Jubilee insurance, the bank further wants the 80-year old insurer to be compelled to honor all obligations under the insurance policy granted to Mohamed.
Speaking to the Star, BIMA Intermediaries Association of Kenya chairperson Washington Ndegea said it is illogical for Jubilee not to stick to the agreement.
“Jubilee can’t void the claim if they did not take Mustafa for a medical check-up...ideally it is their shortcoming,” he said.