Insurance fund makes first payment to policyholders of collapsed firm
Policyholders of collapsed insurance company, Concord, will each receive Sh250,000 as the regulator moves in to pay 1,572 claimants of the firm that went under eight years ago.
The fund will only pay off Sh392 million out of the total Sh467 million demanded by Concord policyholders.
The insurance regulator said it is tapping into the Policyholders Compensation Fund (PCF) for the first time to settle claims of a failed insurer, opening the way to pay back claims for other insurers including Standard Assurance, Blue Shield and United Assurance.
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“This is the first time since its establishment that the fund is compensating policy holder claims for insolvent insurance companies. The maximum compensation payable by the fund on any one claim lodged by a claimant is Sh250,000,” PCF Managing Trustee, Mr William Masita, said.
Concord Insurance case has been dragging in court as its owners made halfhearted efforts to revive it before it was put under liquidation last year.
The Insurance Regulatory Authority put the company under receivership after its paid up share capital declined to Sh121.6 million which was short of the required minimum capital of Sh600 million.
In 2014, a plan was drawn to have shareholders inject Sh1.2 billion and negotiate a tax liability of Sh776 million with Kenya Revenue Authority.
The owners, however, made very little progress towards reviving the company prompting the regulator to file for liquidation.
At the time of filling the winding up petition in January 2016, Concord needed Sh2.4 billion capital injection to get back on its feet.
The firm was finally liquidated due to its inability to pay debts attributable to the lack of capital required to be injected towards its revival.
