Policyholders Compensation Fund (PCF) has compensated 778 policyholders, including KNUT and KUPPET, after the collapse of three insurance firms dating back to June 30, 2023.
Deberious Sikuku, a trustee at the organization representing the public, said the beneficiaries include 724 former clients of Resolution Insurance Company, who have so far been compensated Ksh82.21 million.
Insurance Regulatory Authority (IRA) placed the firm under statutory management in April 2022 after it ran into financial headwinds and was unable to fulfill its obligations.
Sikuku said the Fund has also compensated claims worth Ksh9.02 million to 45 claimants of Concord Insurance, which collapsed in 2013, and another Ksh9.02 million to 9 policyholders of Standard Assurance, which collapsed in 2008.
The two firms are under liquidation and their licences have since been revoked.
Sikuku 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.
He spoke during a five-day sensitization campaign for various stakeholders held in Kisumu County on December 4 – 8, 2023.
He revealed that the fund has accumulated Ksh19.1 billion in levies from insurance companies and policyholders to be utilized in compensating the affected clients in the event an insurance firm collapses.
Insurers and the policyholder, Sikuku said, are required to each contribute a 0.25 per cent levy on the premiums underwritten towards the fund.
“Currently, PCF awards a maximum compensation of up to Ksh250,000 per claim of general insurance,” he said.
However, he said that creditors with higher value claims are expected to wait until the companies’ property and assets are auctioned to be paid their dues.
Other insurance companies that have shut down operations in the last two decades include Access Insurance Company, Kenya National Insurance, Stallion Insurance Company Ltd, Liberty Insurance, and Lake Star Insurance Company.
“The rising trend of business failure in the insurance industry is attributed to insurance fraud, underpricing of insurance products, poor corporate governance practices, poor investment, and economic downturns and global shocks,” he said.
Fredrick Odiero
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