IRA Dismisses S.K Macharia's Directline Shutdown

The Insurance Regulatory Authority has announced that Directline has been placed under heightened surveillance by the Authority.

The Insurance Regulatory Authority (IRA) has responded to the abrupt shutdown of Directline Insurance following an announcement by S.K. Macharia-owned Royal Credit Limited.

IRA in a statement on Tuesday, June 11, said that it had taken note of communication released by Dr. Macharia regarding operations of the Directline Assurance Company Limited (the insurer), which rendered all employees jobless with immediate effect.

The insurance authority on its part however dismissed the communication saying that the insurer’s operations still continue as scheduled.

“The purported actions are null and devoid of any legal effect and as such the insurer continues in full operation as licensed and approved by the Authority,” read part of the statement.

IRA Dismisses S.K Macharia's Directline Shutdown — IRA CEO Godfrey Kiptum at a past event. PHOTO/IRAKenya

Also, IRA declared that the purported transfer of the assets of Directline to any third party is therefore null and void.

Also Read: S.K Macharia Shuts Down Directline Assurance, Fires All Employees

“All policies issued by Directline Assurance Company Limited remain in full force and effect and the insurer remains liable for any claims arising therefrom. All policyholders of the insurer may continue with their operations in accordance with their insurance contracts.” the statement adds.

IRA on Directline Shutdown

In its defense, IRA argues that it has the sole statutory mandate to approve, suspend or cancel the operations of any insurance company in Kenya and that this duty cannot be usurped by any unauthorized party.

Further the Insurance Regulatory Authority has announced that Directline has been placed under heightened surveillance by the Authority.

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“The Authority will take necessary steps as may be appropriate, pursuant to the provisions of the Insurance Act, CAP 487 Laws of Kenya, to ensure sustainability of the insurer and protection of insurance policyholders’ interests,” added IRA.

IRA had on June 4 filed an urgent application against Directline Assurance and others, alleging a breach of the Insurance Act involving Ksh400 million.

The Authority sought court orders to assume control over the insurer’s assets to prevent further unauthorized transactions.

This came following allegations of unauthorized transfer of Ksh400M by Directline Assurance directors to Toy and Suna Holdings.

Notably, the transaction was flagged on June 3, 2024, for contravening Section 191(2) of the Insurance Act.

S.K Macharia Shuts Down Insurance Company

The statement by IRA comes after Directline Assurance, which is the leading provider in Kenya’s Public Service Vehicles (PSV) insurance market, suddenly ceased operations.

Royal Credit Limited chairperson and Royal Media Services (RMS) owner Dr. S.K Macharia made the shocking announcement on Monday, June 10.

In his announcement, Macharia announced that contracts for all staff had been terminated with Citizen TV reporting that all employees had been notified of the termination.

Furthermore, Macharia had announced that the company will no longer be issuing insurance, saying that the board of directors has been dissolved.

According to the RMS owner, all the properties owned by Directline would be taken over by Royal Credit Limited.

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