Invesco Assurance Company, the firm offering covers to public service vehicles, has been placed under liquidation after it defaulted on paying claims running into millions of shillings.
In a notice on Friday, the industry regulator directed the insurer to immediately stop entering into new insurance contracts following the High Court ruling.
“Invesco Assurance Company has been placed under liquidation through a decree of the court dated 6th February 2023 issued in the High Court at Nairobi in Insolvency Petition No. E155 of 2019,” said Godfrey Kiptum, the Insurance Regulatory Authority (IRA) commissioner of insurance and chief executive.
“Following this court decree, Invesco Assurance Company is stopped from issuing insurance policies and therefore not authorised to enter into any new contracts of insurance.”
Kinyanjui & Company Advocates had in July 2019 filed an Insolvency Petition against Invesco seeking, among other orders, that the insurer be liquidated to settle debts of more than Sh29 million.
High Court has been deferring its final orders in the judgment on the application of the insurer, but little progress was realised in paying the debts.
The cash crisis at the insurer had also come to the fore in another court case where the firm was challenging a decree ordering it to pay Sh53.28 million to 60 victims of road traffic accidents.
The High Court has further appointed the official receiver as the provisional liquidator. Invesco joins Concord Insurance Company Limited and Standard Assurance Kenya Limited in liquidation.
The Policyholders Compensation Fund (PCF) will compensate the affected claimants as provided in section 179 of the Insurance Act.
PCF’s primary purpose is to protect policyholders of insolvent insurers by compensating them for unsettled claims.
The maximum compensation payable by the Fund on any one claim lodged by a claimant is Sh250,000.
The Fund was established on September 24, 2004 through legal notice signed by the Minister of Finance and commenced its operations on January 1, 2005.
Insurance companies and policyholders contribute to the PCF fund through a 0.25 percent levy on gross direct premiums written.
Prior to the formation of the PCF, policyholders simply lost all their benefits when their insurance companies were declared insolvent.
Invesco Assurance was incorporated in 1997 and has been the oldest operating PSV underwriter in the country.
The insurer was placed under statutory management on February 28, 2008 but emerged from it on January 18, 2010 after the Matatu Owners Association proposed reviving the company.
IRA has since 2019 rejected the company’s financial performance reports, citing “data inconsistency and non-compliance with submission requirements”.
Invesco had, in 2018, the last time its financial filings were in order, collected Sh1.5 billion in premiums and controlled a market share of 1.2 percent of general insurance premiums.
IRA in 2021 hit Invesco with a fine of Sh24.94 million over missed deadlines of submitting audited books.
Editor’s note: High Court Judge Alfred Mabeya in March 3, directed the Insurance Regulatory Authority to withdraw the letter dated February 24, 2023, placing the underwriter under liquidation. This was after Invesco challenged the directive arguing that the closure was not justified. The court also directed the status quo be maintained pending the determination of the matter.