Directline Assurance, which commands the lion’s share of the motor commercial Public Service Vehicle (PSV) insurance market in Kenya, has abruptly ceased operations.
This follows an announcement by Royal Credit Limited on Monday, June 10, 2024.
In a statement, Royal Credit chairperson S.K. Macharia said all employees have been dismissed effective immediately.
Citizen TV reported that all employees have been notified that their contracts are terminated.
Furthermore, Macharia announced that Directline will no longer be issuing insurance, adding that the board of directors has been dissolved.
He said all the properties owned by Directline will be taken over by Royal Credit.
He explained that the decision was a result of the closure of all the bank accounts belonging to Directline by the Insurance Regulatory Authority (IRA).
However, Macharia accused the IRA of failing to act against the directors of Directline, who he alleged misused Ksh 7 billion belonging to the company.
Consumers Federation of Kenya (COFEK) Secretary General Stephen Mutoro attributed the closure to the predicted hard economic times presented by the Finance Bill 2024.
He further stated that individuals with insurance covers from the company will be unable to make claims after the closure.
“S.K. Macharia’s Directline Assurance has abruptly closed its operations and rendered all its staff jobless. All those seeking claims will have no means of securing the same.
Directline was the PSV sector market leader. It reportedly closed ahead of the tough economic times presented by the Finance Bill 2024,” he said.
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Macharia Takeover Directline
The woes of Directline date back to 2019 when S.K. Macharia declared himself the chairman and director of the insurer.
However, the IRA cautioned Macharia and other shareholders to stop any physical involvement in the operations of the company immediately.
“The purported appointments of Chairman, Directors, and CEO are against the provisions of the Insurance Act and the Corporate Governance Guidelines, which require that such persons be approved by the Commissioner before they can take up those positions,” Godfrey Kiptum, IRA Commissioner of Insurance and CEO said.
Also Read: Nairobi-Based Company Firing 1000 Employees Unveils Restructuring Plan
Macharia took over the operations of Directline, stating that the majority shareholders of the firm are Royal Media Services, Royal Credit Limited, S.K. Macharia, his wife Purity Macharia, and the estate of the late Dan Karobia.
Macharia appealed the decision in 2023 asking the Court to suspend implementation of an arbitration award that restrained him from interfering with the management of the company.
However, the court declared that SK Macharia only holds 9.6 per cent ordinary shares in Directline through Royal Media Services while 90 per cent was held by his late son John Gichia Macharia.
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