Clients of collapsed insurance firms in the country will now get maximum compensation of Sh. 250,000. This is according to changes contained in an announcement by the Policyholder Compensation Fund (PCF).
“It is notified for the general information of the public that, pursuant to the provisions of the section 179 of the Insurance Act and regulation 12 of the Insurance (Policyholders Compensation Fund) Regulations, 2010, the board of trustees of the Policyholders Compensation Fund gives notice that the amount payable as compensation on any one claim for all classes of insurance shall be capped at Sh250,000 until further notice,” said John Keah, the PCF head of secretariat in a gazette notice dated January 5.
The amount is an increase of Sh150,000 from the Sh100,000 that PCF was by law obligated to pay in the event that an insurance company is declared insolvent.
However, policyholders of insurance companies that collapsed before the fund started receiving contributions in January 2005 do not qualify for compensation from the fund.
The PCF was established in 2004 following reforms undertaken in the insurance sector in response to the collapse of several insurance companies which led to policyholders’ exposure to risk and losses of insurance benefits.
By safeguarding the interests of policyholders, the fund is seen to contribute to the stability of the insurance industry by enhancing confidence.
Despite the existence of the fund, however, the compensation process has been on the spot as payment could only be effected when a company had been wound up and liquidation done.
