IRA accused of protecting dodgy insurers

Several firms placed under receivership

In Summary

• Regulator comes under criticism for lengthy placement of  some insurance companies under statutory management.

• A number of policy holders are in court to press for payments.

Treasury CS Henry Rotich with IRA chief executive Godfrey Kiptum at a past event.
Treasury CS Henry Rotich with IRA chief executive Godfrey Kiptum at a past event.

Senators on Wednesday put the Insurance Regularity Authority on the spot for failing to rein in rogue insurance firms that do not honour customers’ claims.

The regulator also came under criticism for the lengthy placement of  some insurance companies under statutory management, tho the detriment of policy holders.

This is after it emerged that a number of policy holders are in court to press for payments.

The cases are also seeking to compel IRA to suspend its decision to place some of the firms under statutory management.

Speaking when he appeared before the Senate’s Justice and Legal Affairs Committee, IRA chief executive office Godfrey Kiptum said that the regulator is facing 41 petitions in court.

Petitioners in most of the cases are seeking to compel the IRA to rescind its decision to place the under firms under statutory management while some want the authority to compel the forms to pay claims.

“Why do we need IRA if all these cases are on receivership and non-payment of claims? IRA was created to deal with these rogue forms not to just place these firms on receivership and subject policy holders to agony,” committee chairman Samson Cherargei said.

Mombasa Senator Mohamed Faki said that besides the court cases, cases of non-payment of claims by some firms is on the rise.

"We have many cases, leave alone the ones in court, of some firms like Amaco, Explico and many others not compensating claimants yet we have the authority in place,"Faki said.

Kiptum told the panel that the regulator been taking stern actions and so far  six insurance firms have been deregistered and three others are currently on receivership for various reason, among them non payment of claims.

“Insolvency, impairment of paid up capital, liquidity and cash-flow challenges and inadequate reinsurance arrangements are some of the reasons why we took the actions,” Kiptum said.

Some of the firms have also failed to comply with various requirements of the Insurance Act, while others have been rocked by mismanagement and stakeholder wrangles.

Access Insurance Company Limited, Kenya National Assurance Company Limited, Stallion Insurance Company Limited, Lakestar Insurance Company Limited, Standard Assurance Limited and Liberty Assurance Limited have all been deregistered.

United Insurance Company Limited, Blueshield Insurance Company and Concord Insurance Company are under statutory management.

The chief executive officer reiterated that in spite of the numerous court cases touching on non-remittance of claims, the authority has developed and enforced stringent measures to protect customers.

“The Authority has established the Insurance Fraud Investigations Unit manned by officers deployed from DCI.

The officers are trained on insurance and they conduct investigations and even arrests rogue managers to ensure claimants are compensated promptly,” he said.

Last year, IRA received 2,233 complaints from policy holders against 3, 140, 000 policies in force during the period.