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| Matatus along Tom Mboya Street in Nairobi’s CBD |
Ownership wrangles that are threatening the closure of Directline Assurance have continued to send jitters across the matatu industry, amid concerns over pending claims estimated at more than Sh17 billion.
This comes as the two other players in the Public Service Vehicle underwriting business–Africa Merchant Assurance Company (Amaco) and Invesco Assurance also undergo turbulent moments, with the latter currently under statutory management after a decision by the Insurance Regulatory Authority (IRA), effected on August 14, over failed financial obligations.
In the latest developments, Directline this week said it has terminated issuance of insurance policies, directing that any further transactions must be made through its original shareholders.
According to Directline, shareholders of the company have resolved to cease issuing policies and stop conducting insurance business effective September 10, 2024.
The company associated with media Mogul S.K Macharia has been rocked by a family feud over ownership, with claims of a takeover plan by some directors and shareholders, a move that has prompted Macharia to make the move.
SK Macharia’s late son, John Gichia who died in a road accident six years ago, founded Directline and there have been court battles to control his estate, then estimated at about Sh1.2 billion. He was also the founder of Triple A Finance and other companies.
According to insiders, there has been a push to dislodge S.K Macharia who is also a shareholder in the insurance company, a fight that is also in court.
Royal Credit Limited, which owns the insurance company has earlier in June announced the closure of the underwriting business, termination of employees’ contracts and the immediate dissolution of its board, as it moved to take over all assets owned by Directline.
SK blamed IRA for failing to take action against former directors who are said to have mismanaged funds to the tune of Sh7 billion.
The regulator has however in both occasions dismissed the closure notice saying the company’s active policies remain in force.
According to IRA, the matter of the company’s shareholding is awaiting determination in court, adding that the Insurance Act (CAP 478 Laws of Kenya) provides a clear process for closing or winding up an insurance company.
“Consequently, 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 may continue with their operations in accordance with their insurance contracts,” Commissioner of Insurance and CEO Godfrey Kiptum said on Wednesday.
Matatu Owners Association president Albert Karakacha has however expressed concerns over the developments in the insurance industry with Directline’s woes a major worry, as it accounts for 60.79 per cent market share of the PSV insurance market.
“Matatu owners are suffering. What we are telling the government is that based on what is happening in PSV insurance, it will soon be difficult to get insured. They (Diectline) have a lot of claims,” Karakacha told the Star on the telephone.
The company closed June last year with Sh1.66 billion gross premiums from motor commercial PSV covers.
MOA has since called on the government to allow the sector to come up with its own insurance company, which will make it easy to effectively cover the sector and resolve any arising issues, including fraud that has rocked motor insurance.
“We know where the problem is. Let IRA come up with a system that will allow Matatu Owners to have a company that exclusively focuses on the sector,” Karakacha said.
by MARTIN MWITA