Invesco Assurance Company, the firm offering covers to public service vehicles, has been placed under liquidation and its operating license cancelled, returning it into a pit it had climbed out of February.
The Insurance Regulatory Authority (IRA) on Friday immediately advised customers to stop entering into new insurance contracts with the underwriter, which is battling court cases linked to defaults on claims settlement.
The IRA has, at the same time, placed Xplico Insurance Company Limited — another matatu insurer — under statutory management, pointing to the challenges facing insurers in the popular public transport segment.
“Existing policyholders [of the two firms] are advised to immediately seek alternative covers from other licensed insurers to ensure that there is no unnecessary exposure,” said the IRA in a statement.
“The Policyholders Compensation Fund (PCF) will compensate the affected claimants as provided for under the Insurance Act, CAP 487 Laws of Kenya.”
IRA had on February 24 placed Invesco under liquidation following a petition by Kinyanjui & Company Advocates but the High Court on March 3, directed the regulator to reinstate its license after Invesco successfully challenged the directive saying the regulator misread court orders.
IRA has appointed PCF as the statutory manager of Xplico while for Invesco, the regulator said it received communication from the court appointing official receiver as the provisional liquidator. The regulator said the appointment of the liquidator is related to two court cases against Invesco in Malindi and Nairobi.
The Malindi one is the Dama Charo Nzai & 57 Others VS Invesco while the Nairobi petition is Salesio Kinyua Njagi & 9 Others VS Invesco.
“The official receiver has taken over the affairs of Invesco Assurance Company Limited for the purposes of liquidation and the insurer’s license is cancelled therewith,” said the IRA.
Invesco joins Concord Insurance Company Limited and Standard Assurance Kenya Limited in liquidation. IRA has been under pressure from a consumers’ lobby group over allegations that it has allowed insurers with low capital levels to continue operating at the risk of customers.
The Consumers Federation of Kenya (Cofek), in September, sued the authority claiming that consumers risk losing over Sh100 billion in the hands of at least 20 insurers it says continue collecting premiums but cannot yet pay claims due to their weak capital positions.
Cofek in the same month issued a demand letter to the IRA, titling the letter as a ‘red alert’ on non-compliance with capital levels and the high exposure for policyholders and has now sued the regulator at the High Court.
“From our investigations, the number of non-compliant licensees masquerading as bonafide insurers has risen. This reality points to a serious challenge in regulation as well as leadership at the Authority,” said Mr Stephen Mutoro, Cofek secretary general, in a letter to the IRA.
