Relief as Kenyans with monies stuck in collapsed insurance firms to be compensated


Relief as Kenyans with monies stuck in collapsed insurance firms to be compensated

In Summary

  • In a notice issued on Monday, the fund flanked by the Insurance Regulatory Authority (IRA) stated it would make its first compensation to policy holders in the defunct Concord Insurance Company which went under in March of 2013.
  • The fund is subsequently expected to make compensations to policy holders in other collapsed insurance firms with the maximum compensation payable by the fund on any one claim lodged is capped at Ksh.250,000.
  • The PCF was empowered to make the compensations following the repeal of laws, in December 2020, which had prohibited reimbursements before the full resolution of collapsed underwriters.

Thousands of Kenyans with funds stuck in collapsed insurance firms are set for relief as the State moves to activate payments from the Policyholders Compensation Fund (PCF).

In a notice issued on Monday, the fund flanked by the Insurance Regulatory Authority (IRA) stated it would make its first compensation to policyholders in the defunct Concord Insurance Company which went under in March 2013.

The fund is subsequently expected to make compensations to policyholders in other collapsed insurance firms with the maximum compensation payable by the fund on any one claim lodged is capped at Ksh.250,000.

“The limit is an amount aimed at cushioning the policyholders and not necessarily the actual amount of the claims. This fund has put in place an elaborate framework to ensure the successful implementation of the compensation,” stated PCF Managing Trustee William Masita.

Claimants are expected to fill necessary forms with supportive documents before submitting them for verification to the PCF for verification as a prerequisite to compensation.

The fund is a State Corporation under the National Treasury and which commenced operations in January 2005 is aimed at protecting policyholders of insolvent insurance companies by providing them with compensation for unsettled claims.

Policyholders and insurance companies contribute to the funding of the PCF through a 0.25 per cent levy on gross direct premiums written.

The funds are utilized towards a partial settlement for claimants in the event that the insurance company becomes insolvent.

The PCF was empowered to make the compensations following the repeal of laws, in December 2020, which had prohibited reimbursements before the full resolution of collapsed underwriters.

PCF estimates claims by policyholders to collapsed insurance firms at just under Ksh.4.5 billion as per data running to June 2019.

The activation of payments is expected to cushion policyholders who lost monies in firms that collapsed nearly 20 years ago.

The fund’s creation was coincidentally established following the collapse of several insurance companies in years’ prior to 2005.

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