Court gags SK Macharia from airing adverts against Directline Assurance

SK Macharia

Media mogul SK Macharia in this picture taken in 2021.

Photo credit: File | Nation Media Group

The High Court has gagged businessman Samuel Kamau (SK) Macharia from running cautionary adverts, warning the public against dealing with an insurer, Directline Assurance.

The insurance company had moved to court seeking orders to stop Royal Media Services, owned by SK, from airing a defamatory media campaign on their TV and radio stations.

While issuing a temporary restraining order, Justice Francis Gikonyo noted the adverts had hurt the financial position of Directline, which he described as a separate legal personality from its warring shareholders.

The judge noted that because the company offered insurance to the public, it had a "serious statutory and public venture under guarded by statutory."

“Accordingly, the 1st defendant (SK Macharia), his agents, employees or servants or any other person is restrained from publishing, printing, distributing, airing or otherwise circulating the advertisements set out in ... the affidavit by Sammy Kanyi,” said Gikonyo in a ruling issued on Wednesday.

Mr Kanyi is the Acting Principal Officer at Directline. The insurance company noted that the campaign falsely claimed that “any insurance covers issued by Directline Assurance are invalid, and Royal Credit Limited cannot guarantee payment of any claims by Directline.”

Directline sought the orders for the adverts to be stopped pending the hearing of the application.

SK’s lawyer, Kamau Kuria had opposed Directline’s request stating that the directors and shareholders of Directline are hijackers of his client’s company. The shareholder wrangle at Directline is also in court.

Mr Macharia’s position has been refuted by the Insurance Regulatory Authority (IRA), which is listed as one of the respondents in the suit.

The IRA insists that the insurer is validly registered and must continue to pay claims arising from the Sh4.86 billion in premiums received from its 120,000 policyholders while selling new covers to willing clients.

“All insurance policies issued by Directline Assurance remain in full force... Policyholders are assured that their contracts remain valid, and the insurer is fully liable for any claims arising therefrom. Any purported status to the contrary is void of legal effect,” said the chief executive officer of IRA Godfrey Kiptum on December 23, 2024.

Encouraged by the IRA’s backing, Directline has opted to challenge one of its powerful shareholders in court as the risk of losing business to its rivals becomes clearer.

Directline is the biggest insurer of commercial PSVs, having received over half of the industry's premium by covering matatus and long-distance buses. The PSV segment covers motorists and passengers from death, injuries, and vehicle damages resulting from accidents.

Data from IRA shows that in the first quarter ending March 2024, Directline Assurance had a market share of 59.79 percent premium underwritten for commercial PSVs, down from 64.95 percent in a similar period.

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