Most public service vehicles (PSV) users in Kenya are likely to be uninsured despite honouring their insurance payments to Directline Assurance.

This follows a revelation by lawyers representing businessman S.K Macharia, who accused “fraudulent directors” within the company of swindling Sh8 billion from premium policy holders.

Macharia who claims to be the legal and rightful owner of the company moved to court to seek legal action against the fraudulent theft, demanding accountability for the Sh8 billion.

Additionally, he is seeking to reclaim the company which was allegedly illegally seized through a forged CR 12 form – an official document by the Registrar of Companies in Kenya showing who the current directors and shareholders of a company are.

According to Danstan Omari, one of Macharia’s lawyers 98 per cent of people using PSVs in the country are not insured.

“They are cheated that they are insured and are exposed to serious risks, and anybody who will be involved in an accident, count yourself you are alone with your own God. There is no insurance in the vehicles that are having a sticker called Direct Line,” he said.

Omari added that they were forced to seek the court’s intervention to compel the registrar of companies to register the rightful owners of the company.

According to Martina Swiga, Macharia’s advocate, the company’s CR12 was illegally altered and shares were transferred contrary to the law and the Insurance Act.

In the wake of the recent revelations and legal battles, Directline Assurance ceased issuing insurance to its customers earlier this month.

These developments came barely three months after the company announced that it had decided to completely halt its operations and terminate all of its employees’ contracts including the company’s board of directors.

“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,” said Macharia.

Insurance services

Direct Line Assurance has for years dominated Kenya’s PSV insurance market, controlling up to 65 per cent of the country’s PSV insurance services and amassing an annual gross turnover of Sh4.26 billion.

However, as the company now finds itself in the middle of a legal battle and its operations halted, tens of thousands of policy holders are left in limbo with concerns of being unprotected in the event of accidents or incidents that need coverage.

Without coverage, they also risk lawsuits and penalties over non-compliance, and not being able to replace damaged vehicles. Additionally, with its operations halted, Directline being the biggest competitor leaves a big gap, leaving matatu operators and PSV owners with a few options to choose from.

The allegations of missing premiums also raise major concerns over the credibility of the insurance sector which is considered an extremely high-risk market.