Policyholders of collapsed insurance companies will soon get more in compensation if an ongoing review approves the increase.
The Policyholders Compensation Fund(PCF) is at the moment paying upto KSh 250,000 to claimants of collapsed insurers that collapsed after 2006.
The PCF was established 16 years ago, implying that this state organ is not compensating those policyholders who lost their claims before this period.
William Masita, the PCF Managing Trustee, said the Fund would study how much policyholders will be paid, which could go as high as KSh 400,000.
Policyholders contribute 0.25 per cent of their premiums to the compensation fund, which their insurance companies match. At present, PCF is settling claims made against collapsed Concord and Standard Assurance Company.
Standard Assurance collapsed in 2009 with KSh 1.2 billion in unpaid claims while Concord was placed under statutory management on vide a gazette notice No 2194 dated February 6 2013.
Underwriters that have since gone under include Kenya National Assurance Company (KNAC), Lakestar Insurance, United Insurance, Blue Shield Insurance, Access Insurance Company, Stallion Insurance Company Ltd and Concord Insurance.
Underwriters that collapsed before the PCF was set up still have to wait for the courts to liquidate the collapsed underwriters before policyholders are paid their claims.
A case in point is the defunct state-owned Kenya National Assurance Company(KNAC), which collapsed close to two decades ago.
As at March 20, 2014, a total of KSh 3.9 billion in claims had been settled by KNAC while an estimated KSh 405 million still unclaimed in its Life Fund is what KNAC passed on to Unclaimed Financial Assets Authority(UFAA).
The 25,000 claimants compensated were mostly those with small covers of KSh 20,000 and KSh 30,000.
The Fund’s resources had grown to KSh15 billion as at December 2020.
“We plan to do an actuarial study in the next financial year and determine the sufficiency of the maximum amount we can pay,” said Masita.
The PCF was set up to help settle claims when an insurance firm is placed under statutory management or loses its licence when it is unable to meet customer claims.
Standard Assurance owes creditors KSh685 million, and the Fund will settle KSh172 million while United Insurance which has been in receivership for 15 years, owes policyholders KSh1.2 billion, out of which PCF will pay KSh514 million.
Blueshield Insurance Company Limited, which was placed under receivership in September 2011, has KSh2.2 billion claims, out of which KSh2 billion will be paid out from the Fund.
Criminal syndicates involving rogue police officers, insurance assessors, garages and underwriters are said to be behind the fraud that has led to the collapse of many underwriters, especially those in the motor and public service vehicles(PSV) sector.
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