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In a significant development within the insurance sector, Royal Credit Company has announced the immediate closure of Directline Assurance Company.
This decision, as revealed in a statement by billionaire S. K. Macharia, the chairman of Royal Credit Limited, includes the termination of all Directline employees and the dissolution of its board.
Macharia explained that the closure was prompted by the Insurance Regulatory Authority (IRA)'s decision to shut down all Directline bank accounts.
He attributed the company's downfall to the misappropriation of over Sh7 billion by the former directors of Directline, a matter he claims the IRA failed to address adequately.
As a result, the staff members contracts were terminated immediately and all assets owned by Directline Assurance will be taken over by the Royal Credit Limited.
The company has also suspended all insurance services.
The closure of Directline Assurance marks a significant shift in the insurance landscape, affecting numerous policyholders and stakeholders.
Royal Credit's takeover of Directline's assets aims to mitigate some of the financial impacts, although the immediate cessation of all insurance services provided by Directline Assurance has left many in uncertainty.
Directline Assurance has been a notable player in Kenya's insurance market, particularly known for its motor insurance products.
In June 2023, Directline closed the year with Sh1.66 billion in gross premiums from motor commercial PSV insurance, capturing a 60.79% market share, as per the Insurance Regulatory Authority.
It was followed by Xplico with 9.7%, Africa Merchant Assurance with 9.26%, Invesco with 9.01%, and GA Insurance with 6.94%.
In the first half of 2023, Directline experienced underwriting losses of Sh576.22 million for insuring matatus and buses, surpassing the Sh311.88 million loss recorded for the entire year of 2022.
The sudden closure raises questions about the stability and regulatory oversight within the industry.
Dr. Macharia's criticism of the IRA for not taking timely action against the former directors highlights potential gaps in regulatory enforcement that may have allowed financial mismanagement to go unchecked.
The Insurance Regulatory Authority has not yet responded publicly to Dr. Macharia's allegations or the closure of Directline Assurance.
As this story develops, further details will emerge, shedding light on the full impact of Directline Assurance's closure on the market and its clients.
The industry will be watching closely to see how Royal Credit handles the transition and what measures will be put in place to protect policyholders' interests.
For now, the insurance community is left grappling with the sudden loss of a key player and the implications for market stability and consumer trust.
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