INSURANCE

IRA stops SK Macharia's plot to takeover Directline Insurance

IRA has said the responsibility to have control over an insurance company is vested on directors approved by the authority.

In Summary

•The insurance regulator has instructed shareholders of Directline Insurance Company Limited to shun involvement with operations of the motor vehicle insurance company.

•This follows after businessman Samuel Kamau Macharia attempted to take over the insurance owned by his late son John Macharia.

SK Macharia
SK Macharia

The insurance regulator has instructed shareholders of Directline Insurance Company Limited to shun involvement with operations of the motor vehicle insurance company.

Insurance Regulatory Authority has said the shareholders risk legal action if they fail to comply with the authority's directive.

In a letter addressed to the shareholders, the Commissioner of Insurance and IRA chief executive Godfrey Kiptum pointed out that the alleged appointment of a chairman of the company is irregular and in contravention of the provisions of the Insurance Act.

“The purported appointments of chairman, directors and CEO is against the provisions of the Insurance Act and the Corporate Governance Guidelines which require that such a person be approved by the commissioner before they can take up those positions,” he said.

This follows after businessman Samuel Kamau Macharia attempted to take over the insurance owned by his late son John Macharia.

Macharia declared himself as the chairman and director of the public service vehicles (PSV), private and commercial motor vehicles underwriter.

In a letter dated September 3 to the staff, Macharia said he was acting in the capacity as a representative of the majority shareholders including Royal Media Services, Royal Credit Limited, S.K Macharia, P.G Macharia and the estate of the late Dan Karobia.

He also said he had suspended Terry Wijenje as managing director, CEO and principal and appointed Isaac Ngaru in an acting capacity.

Kiptum has however said the responsibility to have control over an insurance company was vested on directors approved by the authority.

“The authority does not recognise any purported action taken to control the affairs of the insurer outside the legal framework and hence such actions are null and void,” he said.

In its commencement in 2005, the company created itself as the largest PSV underwriter in the country with a market share 60 per cent at the end of the year 2015.

However, its troubles have seen the firm make a loss of Sh32,921 million period between July and September 2018.

During the period it only held a 2.09 per cent share of the total premium held by the general business insurance companies, according to IRA.