The Insurance Regulatory Authority (IRA) has revoked the closure of Directline Assurance Company, hours after an announcement by media mogul SK Macharia through Royal Credit Limited, that the insurance firm had closed operations and fired all employees.
IRA Chief Executive Godfrey Kiptum on Tuesday rubbished the move, saying the insurer will continue to be operational.
“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 purported transfer of the assets of the insurer to any third party is therefore null and void ab initio (from the start),” Mr Kiptum said in a press statement to explain the status of the firm.
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“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 IRA CEO added.
The regulator maintains that it has the sole authority to “approve, suspend or cancel” the operations of any insurance company in Kenya, terming Mr Macharia’s action as usurping of IRA duties.
Mr Macharia, the chairman of Royal Credit Limited - one of the shareholders of Directline, announced on Monday that the insurer had closed operations and laid off all its staff.
“The board of directors of Directline has been dissolved and all the assets taken over by Royal Credit Ltd. All employees have been dismissed, and Directline will no longer issue insurance services,” Mr Macharia said.
The communication caused panic, especially in public transport, as the firm has the largest share of the public service vehicles insurance business.
IRA now says it has placed the insurer under “heightened surveillance”.
“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,” Mr Kiptum said.
