Policyholders Compensation Fund has today paid Sh390 million to claimants of Concord Insurance Company which was wound up in 2013.
This marks Kenya’s first insurance claims payout and the first phase of compensation for policyholders and claimants of insurance companies that have been wound up.
Speaking during the Kickoff Ceremony Treasury Chief Administrative Secretary Hon. Nelson Gaichuhie said, “Today, PCF has demonstrated its true purpose of promoting confidence in the insurance sector by providing a cushion to consumers of insurance services in the unlikely event of an insurance company closing down.”
Gaichuhie said the Government has enhanced the mandate of the Fund to participate in statutory management and liquidation of insurance companies that have been placed under statutory management by Insurance Regulatory Authority.
“The objective of these changes was to ensure prompt payment of compensation to claimants of insurance companies placed under Statutory Management and protection and preservation of assets of these companies,” he added.
Managing Trustee and CEO of PCF, William Masita said the maximum amount of compensation that shall be payable to any claimant is Kshs.250,000.
“The Fund has set aside KShs.1 billion for compensation of policyholders in this financial year 2021/2022. However, this first phase of compensation will be to the tune of KShs. 390 million in respect of 1,570 Claimants of Concord insurance Co. Ltd which had a total insurance claim obligation of KShs. 467 million at the time it was placed under statutory management,” Masita said.
Other insurance companies that have been wound-up alongside Concord include United Insurance Company, Standard Insurance Company, and Blue Shield Insurance Company.
“We are also in the process of verifying and preparing compensation claims for three other companies namely Standard Assurance limited, United Insurance Company limited and Blue Shield Insurance Limited whose compensation payments will be rolled out in the near foreseeable future,” he added.
On his part, PCF Chairman Reuben Ndegwa says the fund has had tremendous growth in terms of Asset base from an initial seed capital of KShs. 35 million from the National Treasury at inception to an asset base value of approximately KShs. 14 billion as at the end of financial year 2020/2021.
“Our scope of coverage has increased with the compensation amount moving from KShs. 100,000 to KShs. 250,000. An expansion of its mandate to not only include Compensation but also Statutory Management of collapsed insurers. All these improvements and changes are geared towards making the Fund a world class entity which is highly respected within the industry,” he explained.
The Policyholders Compensation Fund commenced its operations in January 2005 through Legal Notice No. 104 of 2004, to alleviate loses encountered by policyholders and claimants as well as protect assets of companies placed under statutory management.
The Government later elevated the Fund to a semi-autonomous State Agency with its own Board of Trustees and with sufficient resources to participate in statutory management and liquidation of insurance companies liquidated by Insurance Regulatory Authority.
“While this is a success, we have to note the delay and assure policyholders affected that we are currently in discussion with the official receiver in the AG’s office to accelerate the process of liquidation to benefit policyholders,” The Commissioner of Insurance and Insurance Regulatory (IRA) CEO Godfrey Kiptum.
Following IRA’s proposal to amend the Finance Act of 2019 which stated that policyholder’s compensation was to be affected after liquidation, the 2020 Finance Bill now states that compensation happens immediately the company is placed under statutory management.
