Tuesday, June 18, 2024

Closure of Directline Assurance by SK Macharia is null and avoid, says regulator

The Insurance Regulatory Authority has rubbished a move Royal Media Services owner and the chairperson of Royal Credit Company SK Macharia to shut down DirectLine Assurance.

This comes barely a day after Macharia announced that DirectLine Assurance has collapsed. Macharia made the announcement through a news item that was broadcast by Royal Media Services’ Citizen Tv yesterday.

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According to the report by Macharia’s Citizen Tv, DirectLine Assurance will no longer be issuing insurance services. The report further claimed that the board of the company had been sent home and all properties associated with DirectLine had been taken over by the Royal Credit company.

At the same, all employees who have been working with company had been sent packing. Macharia stated that this had been caused by the closure of all DirectLine bank accounts by the Insurance Regulatory Authority.

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Macharia further blamed the IRA for failing to take action against former directors at DirectLine, who he claimed were responsible for the misappropriation of more than Sh. 7 billion of the company’s funds.

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However, the IRA has now said that Macharia’s closure of the company is null and void.

“The purported actions are null and devoid of any legal effect and as such the insurer continues in full operation as licensed and approved by the Authority,” the IRA has said.

“The purported transfer of the assets of the insurer to any third party is therefore null and void ab initio.”

IRA added that all policies issued by Directline Assurance Company Limited remain in full force and effect and the insurer remains liable for any claims arising therefrom.

“All policyholders of the insurer may continue with their operations in accordance with their insurance contracts,” the insurers regulator stated, adding that it has the sole statutory mandate to approve, suspend or cancel the operations of any insurance company in Kenya and this duty cannot be usurped by any unauthorized party.

“The insurer has been placed under heightened surveillance by the Authority and the Authority will take necessary steps as may be appropriate, pursuant to the provisions of the Insurance Act, CAP 487 Laws of Kenya, to ensure sustainability of the insurer and protection of insurance policyholders’ interests.”

DirectLine has been operating as the largest insurer of public service vehicles with an estimated market share of over 60 per cent. As at April 2022, data from the IRA showed that  the insurer had collected Sh. 3.1 billion to control 76.9 per cent of the matatu insurance sector.

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