Kenya will begin compensating policyholders who claim for insolvent insurance companies, said William Masita, the managing trustee at the State-owned Policyholders Compensation Fund (PCF).
Masita said Monday the fund was commencing the compensation of claimants for companies that have been declared insolvent and whose liquidation process has been approved by the courts of law.
“The decision to establish the fund was a key initiative in the reform of the insurance sector. Its primary purpose is to protect policyholders of insolvent insurance companies by compensating them,” Masita said in a statement. “The maximum compensation payable by the fund on any one claim lodged by a claimant is 250,000 shilling (2,280 U.S. dollars).”
Insurance companies and policy holders each contribute into the fund a levy of 0.25 percent on gross direct premiums written and the kitty is utilized towards partial settlement for claimants in the event that an insurance company becomes insolvent.
Masita added that the fund has commenced the process of payment of policyholder claims for Concord Insurance which is currently in liquidation.
“This is the first time since its establishment that the fund is compensating policyholder claims for insolvent insurance companies,” he noted.
Masita said that the fund was established in 2005 following the collapse of several insurance companies which led to loss of benefits for policyholders as well as the need to improve public confidence in the insurance sector. Before the introduction of the fund, policyholders lost their benefits wherever their insurance company became insolvent. Enditem