The Insurance Regulatory Authority (IRA) has clarified that the shareholding dispute involving Directline Assurance Company Limited is currently awaiting a court decision.
IRA in a statement shared on Wednesday addressed claims the that the insurance company had ceased issuance of insurance services as reported by Citizen TV on Tuesday, September 10, 2024.
The IRA emphasized that the Insurance Act CAP 487 outlines a clear procedure for closing or winding up an insurance company.
Further, Godfrey K. Kiptum, the Commissioner of Insurance and Chief Executive officer of IRA assured policyholders that all policies issued by Directline Assurance remain valid and enforceable.
“All policyholders of the insurer may continue with their operations in accordance with their insurance contracts,” the statement read in part.
Insurance Regulatory Authority’s Role
IRA is a State Corporation established under the Insurance Act, CAP 487 Laws of Kenya with the mandate of regulating, supervising and promoting development of the insurance industry in Kenya.
The Authority executes its mandate through a combination of legal and regulatory measures provided for under the Insurance Act aimed at ensuring industry stability and market confidence.
Also Read: SK Macharia’s Directline Stops Issuance of Insurance With Immediate Effect
History of Directline Assurance Disputes
The initial reports of the dispute at Directline Assurance surfaced in early 2024, highlighting issues centered around fraudulent CR12 documents that misrepresented the company’s true ownership. These revelations led to significant legal and operational challenges.
By June 2024, the dispute had resurfaced, with the company deeply submerged into conflicts over the fraudulent documents. During this period, Directline faced increasing financial instability and regulatory scrutiny. The situation escalated, resulting in the freezing of bank accounts, which severely impacted their ability to operate.
This period was marked by intense legal battles and efforts to resolve the ownership disputes. Efforts to solve the impasse did not prevent the eventual cessation of their insurance operations in September 2024, although the IRA has repeatedly denied the claims.
Also Read: S.K Macharia Shuts Down Directline Assurance, Fires All Employees
S.K Macharia June Announcement on Directline Assurance
In June, S.K. Macharia, the Chairperson of Royal Credit, announced the immediate shutdown of the company and the dismissal of all employees. Macharia explained that this decision was due to the closure of all the company’s bank accounts by the Insurance Regulatory Authority (IRA).
Macharia accused the IRA of failing to act against the directors of Directline, whom he claimed had misused Ksh 7 billion belonging to the company. Meanwhile, the Secretary General of the Consumers Federation of Kenya (COFEK), Stephen Mutoro, attributed the closure to the anticipated economic hardships resulting from the Finance Bill 2024.
During the announcement, Macharia also stated that individuals covered by Directline Insurance were unable to make claims following the closure.
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