Policyholders with Concord Insurance Company Ltd (in liquidation) will be paid after an eight-year wait, the Policyholders Compensation Fund has announced.
At least 1, 572 claimants will benefit from the payments, with PCF expected to spend Sh392 million. Total claims, however, stand at Sh467 million.
The maximum compensation payable by the Fund on any single claim is Sh250,000.
Concord Insurance Company was placed under statutory management on March 6, 2013, after running into financial difficulties rendering it unable to pay claims and other financial obligations.
PCF Managing Trustee William Masita on Monday said the Fund has commenced compensation of claimants for companies that have been declared insolvent and whose liquidation process has been approved by the courts.
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
Other insurers facing financial difficulties include United Insurance, Standard Assurance and Blue Shield Insurance, where policyholders and beneficiaries have struggled to get compensation.
“The Fund will first compensate the policyholder claims of Concord Insurance Co. Ltd and subsequently undertake compensation of claimants of the other insurers," Masita said.
Insurance companies and policyholders each contribute to the Fund a levy of 0.25 per cent on gross direct premiums written.
By the time it was being placed under statutory management, Concord Insurance had a market share of 0.2 per cent and was mainly involved in the underwriting of motor private and motor commercial businesses.
The PCF is a State Corporation set up under the Insurance Act.
This is the first time in the history of insurance business in the country such compensation is being made by the state agency, tasked with intervention in cases of insolvency and distress in the insurance industry.