State pays out Ksh.390 million as first claims from collapsed insurers

The government through the Policyholders Compensation Fund (PCF) has paid out the first ever claims from collapsed insurers.

The fund paid out Ksh.390 million to the claimants of Concord Insurance Company on Wednesday with the maximum pay out per claimant set out at Ksh.250,000.

This is the country’s first insurance claims payout for wound up underwriters despite the fund being in operation since 2005.

The payout covers 1570 claimants in the insurer which was wound up in 2013.

“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,” said Treasury’s Chief Administrative Secretary Nelson Gaichuhie.

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

The fund is expected to pay compensation claims for three other companies in the near term, including Standard Assurance Limited, United Insurance Company and Blue Shield Insurance Limited.

The PCF is a semi-autonomous agency which is further tasked with the administration of collapsed underwriters.

Recent amendments have cleared the path for the government agency to immediately pay out claims subsequent to the placing of an insurer under statutory management.

The collapse of underwriters has nevertheless come down in recent years with the collapse of most outfits happening before 2005.