‘Null and void’ – IRA dismisses decision to shut down Directline Assurance
The Insurance Regulatory Authority (IRA) has dismissed the decision to close down Directline Assurance Company Limited.
Commissioner of Insurance and IRA Chief Executive Officer Godfrey Kiptum in a statement released on Tuesday, June 11, 2024, said Directline Assurance continues in full operation as licensed and approved by the authority, terming the decision to shut it down as null and void.
"The Insurance Regulatory Authority (the Authority) has taken note of communication released by Dr S. K. Macharia through Royal Credit Limited regarding operations of Directline Assurance Company Limited (the insurer). The purported actions are null and devoid of any legal effect and as such the insurer continues in full operation as licensed and approved by the Authority. The purported transfer of the assets of the insurer to any third party is therefore null and void ab initio," Kiptum said.
Insurance claims
IRA further noted that Directline Assurance will remain liable for any claims that will arise from the policies that are currently in force.
The state insurance regulator also said that Directline Assurance's policyholders may continue with their operations in accordance with their insurance contracts.
"All policies issued by Directline Assurance Company Limited remain in full force and effect and the insurer remains liable for any claims arising therefrom. All policyholders of the insurer may continue with their operations in accordance with their insurance contracts," the statement reads.
Closing down Directline Assurance
While dismissing the decision to close down the insurer, Kiptum said IRA has the sole statutory mandate to approve, suspend or cancel the operations of any insurance company in Kenya.
"The Authority has the sole statutory mandate to approve, suspend or cancel the operations of any insurance company in Kenya and this duty cannot be usurped by any unauthorized party," he said.
According to the state insurance regulator, Directline Assurance Company has been placed under heightened surveillance by the authority.
Policyholders' interests
IRA says it will take necessary steps, pursuant to the provisions of the Insurance Act, CAP 487 Laws of Kenya, to ensure the sustainability of the insurer and protection of insurance policyholders' interests.
"The insurer has been placed under heightened surveillance by the Authority and the Authority will take necessary steps as may be appropriate, pursuant to the provisions of the Insurance Act, CAP 487 Laws of Kenya, to ensure sustainability of the insurer and protection of insurance policyholders' interests," Kiptum said in the statement.
Media mogul SK Macharia had on Monday, June 10, 2024, issued a statement through Royal Credit Limited, saying that Directline Assurance Company Limited had ceased operations as an insurer.
The company's staff had been issued with termination letters.
"The board of directors of Directline has been dissolved and all the assets taken over by Royal Credit Ltd. All employees have been dismissed, and Directline will no longer issue insurance services," Macharia said
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