Directline Assurance is now facing serious pressure after the Competition Authority of Kenya (CAK) found that the company unfairly frustrated two small garages in Nairobi by delaying payments for work that had already been completed.
The two garages had spent months waiting for money owed to them after repairing vehicles insured by Directline, and their complaints eventually pushed CAK to take action.
The situation shows how long delays by a major company can place small businesses in a difficult financial position.
The complaint involved repair work done in 2023 and 2024. The garages had carried out panel beating, painting, and mechanical repairs on vehicles that Directline had authorised. By May 2024, both garages had reached a breaking point. They told CAK that despite completing the work and submitting all required documents, the insurer had failed to pay them.
They provided job authorisation letters, invoices, and customer satisfaction notes to show that everything had been done according to procedure. Even with all this information, the garages said Directline simply ignored their invoices for months.
CAK decided to investigate the relationship between Directline and the garages. After reviewing the documents, communication records, and the payment delays, CAK concluded that Directline had significant buyer power in the arrangement.
According to CAK, the insurer used this position to delay payments without giving clear reasons or engaging with the garages in good time. This conduct amounted to abuse of power under competition rules.
At the time the garages reported the issue, one was owed Ksh7.6 million and the other Ksh5 million. The delays left them under financial pressure, especially because small garages depend on regular cash flow to pay workers, buy spare parts, and run daily operations. CAK’s intervention pushed Directline to make partial payments, but the company still left a balance of Ksh4.7 million and Ksh1.3 million unpaid.
Even after the partial settlement, Directline failed to respond to at least 19 official follow-up requests from CAK, making the situation worse.
Directline claimed that they had been unable to access their bank accounts for some time, but CAK noted that this did not justify the long silence or the failure to address the outstanding invoices.
The regulator viewed this non-cooperation as a serious concern, leading to a heavy penalty. CAK fined Directline Ksh42.5 million for each of the two violations.
The insurer was also ordered to clear all remaining invoices immediately and update its supplier contracts so that late payments attract interest going forward.
CAK Director-General David Kemei said the penalty shows how important timely payments are, especially for small businesses. He explained that when big companies delay payments, they put jobs and livelihoods at risk because small firms cannot absorb long financial gaps. His comments highlight the wider impact such delays can have beyond just the affected garages.
Directline has been dealing with internal ownership disputes, and it is not yet known whether the company will comply with the ruling or challenge it.
The decision sends a message about the need for fair treatment of suppliers, especially smaller businesses that depend heavily on consistent payments to stay afloat.
