The Insurance Regulatory Authority (IRA) has issued a statement addressing allegations made by Dr S.K. Macharia concerning the regulation of Directline Assurance Company Limited, a company he is directly tied to.
These allegations, communicated through his lawyer, have been accompanied by a cautionary advert aired on Citizen TV under Royal Credit Limited, raising questions about the status of insurance policies issued by the company.
Directline Assurance policies remain valid
The IRA has clarified that Directline Assurance Company Limited continues to operate as a licensed and approved insurer under their oversight.
The authority reassured policyholders that all insurance contracts issued by the company remain valid and enforceable.
"Policyholders are assured that their contracts remain valid, and the insurer is fully liable for any claims arising therefrom," said Godfrey K. Kiptum, Commissioner of Insurance and Chief Executive Officer at IRA.
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Clarification on CR12 forms
The controversy has also raised questions about rectifying CR12 forms, and documents issued under the Companies Act by the Business Registration Service and the Registrar of Companies.
The IRA emphasised that it has no legal authority to alter these forms or make any related changes.
Any person requiring rectification of such records should make the necessary application to relevant statutory offices in accordance with the governing laws.
Additionally, the authority noted that changes in an insurance company's shareholding do not affect the validity of policies issued to its policyholders.
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Commitment to stakeholders and due process
The IRA reaffirmed its dedication to safeguarding the interests of policyholders and insurance beneficiaries.
It urged stakeholders to follow proper legal channels for resolving disputes related to Directline Assurance's shareholding.
In June 2024, the company's chairman, Dr. S.K. Macharia, announced the cessation of all insurance services, termination of employees, and dissolution of the board of directors.
This decision was attributed to the freezing of the company's bank accounts by the Insurance Regulatory Authority (IRA) and allegations of mismanagement involving former directors accused of embezzling funds totaling Sh7 billion.
However, the IRA promptly refuted the closure announcement, asserting that Directline Assurance remained operational and that any purported actions to cease operations were null and void.
The IRA emphasised its sole authority to approve, suspend, or cancel the operations of insurance companies in Kenya and placed Directline under heightened surveillance to ensure the protection of policyholders' interests.
The situation has been further complicated by ownership disputes and allegations of fraudulent documentation concerning the company's shareholding.