The National Treasury through the Policyholders Compensation Fund (PCF) has disbursed Kshs93.18 million to policyholders of fallen insurance firms, dating back to June 30, 2023.
Deputy Director of Corporate communications at PCF, Rosemary Kavili, appealed to policyholders with outstanding claims from the collapsed insurance firms to file claims within two years to be eligible for compensation from the kitty.
“We will traverse across all counties with a target of calling upon the public to come forward and lodge their claims with PCF for those members of the public who had claims with Resolution Insurance Company Limited -Under Statutory Management and Standard Assurance Company -Under Liquidation,” she further stated.
Kavili made the remarks during the opening of a five-day sensitization campaign for various stakeholders. The event was set to take place in Kisumu County from December 4th to December 8th.
The campaign, dubbed PCF Mtaani is aimed at enhancing public understanding and knowledge on PCF.
Details of the compensation to policyholders
According to the PCF, 778 clients are to benefit from these monies. Further, the compensation fund denoted the details of the compensation, highlighting the insurance firms that had been declared defunct in recent times.
On this, the beneficiaries include 724 former clients of Resolution Insurance Company. Notably, clients that were negatively impacted by the fall of Resolution Insurance have so far been compensated Sh.82.21 million.
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The Insurance Regulatory Authority (IRA) placed the insurer under statutory management in April 2022 after it ran into financial headwinds and was unable to fulfill its obligations.
Additionally, the compensation fund has also compensated claims worth Ksh.9.02 million to 45 claimants of Concord Insurance.
Concord Insurance collapsed in 2013 after the Kenyan insurer was unable to meet its obligations toward its policyholders.
Furthermore, in breach of legal obligation, Concord had failed to provide biannual financial reports in 2012 which placed it under scrutiny before its collapse and liquidation.
Another Ksh.9.02 million was compensated to 9 policyholders of Standard Assurance.
The insurer collapsed in 2008. Currently, it is under liquidation and its insurance license have been revoked.
Fallen Insurers in Kenya
According to the Policyholders Compensation Fund, there are only two listed liquidated insurers in the country. These are Standard Assurance Kenya and the Concord Insurance.
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However, according to a study on insolvency of Kenyan insurers by the University of Nairobi, over the past 15 years, Kenya has seen the collapse of 10 insurance companies.
“The consensus is that inadequate price and low loss reserves are the major contributors of insolvency. Other factors of insolvency depend mainly on risk exposure experienced by individual companies,” the study reveals.
In recent times, the National Treasury made the process of compensation from defunct insurers easier after it removed the rule that required that courts first conclude an insolvency case before compensation starts.
This previous regulation worked against claimants since insolvency court cases can drag for longer than 10 years.
