The Insurance Regulatory Authority's (IRA) announcement that it had placed three insurers under statutory management has drawn the ire of insurance agents.
The three insurers are Trident Insurance Company, KUSCCO Mutual Assurance and Corporate Insurance Company. They are also barred from writing new policies.
Insurance agents affiliated to the Bima Intermediaries Association of Kenya (BIAK) have criticised the IRA for what they say is the “abrupt closure “of the three insurance companies, warning that the move has left thousands of policyholders in limbo, reported Kenya New Agency.
BIAK Chairman Washington Ndegea told the media that the regulator ought to have engaged industry players first and given the affected insurance companies time to prepare their policyholders to seek alternative insurance cover before implementing the decision.
“By shutting down those three insurance companies, the agents and brokers were left with no way of preparing their clients to look for insurance elsewhere, and that is why we are saying it was unethical and unprofessional for the regulator to do that,” he added.
On 11 March, the IRA announced the statutory management decision, explaining that it was “taken to safeguard the interests of policyholders, creditors and the general public, and to stop further accumulation of risks and liabilities”.
Contrary to the assertions by the insurance agents of the "abrupt closure" of the insurers, the IRA had said, “The decision was arrived at after extensive supervisory engagement with the three insurers, during which the Authority noted continued deterioration in the companies’ financial positions and failure to meet mandatory solvency requirements. Despite several regulatory interventions and directives issued by the Authority to safeguard policyholders’ interests, the companies did not demonstrate sufficient capacity to restore compliance within the stipulated timelines.”
The IRA also appointed the Policyholders Compensation Fund as the statutory manager for the three insurance companies, effective 11 March.