- Court heard that SK Macharia and one Bashir Mburu directed Diamond Trust Bank to effect transfer of Sh400 million to Toy and Suna Holdings Limited account.
- The Authority argued that the move by the parties violated a section of the Insurance Act and is damaging to the interests of policyholders and beneficiaries.
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The Insurance Regulatory Authority has obtained temporary orders halting withdraw of money held in the name of Directline Assurance Co Limited at Diamond Trust Bank.
Commercial Judge Alfred Mabeya issued the order following allegations by the Authority that money meant for policy holders may be lost.
IRA filed the application last week after following a letter dated May 16 in which SK Macharia and one Bashir Mburu directed Diamond Trust Bank to effect transfer of Sh400 million to Toy and Suna Holdings Limited account.
Toy and Suna, according to court papers, is owned by SK Macharia.
The court heard that the money was to finance the development of stalls and low cost housing at the Toy market.
IRA said it became aware of the said transaction on June 3.
The Authority argued that the move by the parties violated a section of the Insurance Act and is damaging to the interests of policyholders and beneficiaries.
Section 191 (2) of the Act prohibits insurers from engaging in any business other than the business for which they registered.
"It is apparent that the subject transaction is not insurance business and is therefore a breach of the insurers license terms," IRA told court.
Justice Mabeya, who certified the matter as urgent, said the respondents (Directline Assurance Co limited, Dr SK Macharia, Bashir Mburu, Toy and Suna Holdings Limited and Diamond Trust Bank) should not make any withdrawals or transfers or any other transactions that could result in funds being removed from various bank accounts belonging to directline without IRA’s written authorisation
The court also issued a temporary order restricting the respondents from instructing Diamond Trust Bank or the interested parties on any transactions relating to the funds held in the name of or on behalf of Directline.
Equity, Family and I&M Bank have been listed as interested parties in the case.
Through advocate Christopher Wairoma, IRA says Macharia and Bashir have effected a transfer of a substantial amount of insurers' funds totalling to Sh400 million.
"We have since initiated an inspection into the subject transaction," IRA said.
"The ongoing inspection is intended to facilitate enforcement action to protect the interest of policyholders and beneficiaries who are owed a total of Sh2 billion in unpaid claims as at April 30 and who are at risk of losing their just compensation unless the orders sought are granted," it adds.
The Judge directed the application be served on the respondents immediately and responses be filed within seven days.
He said he will issue further directions on June 18.