Resolution went into statutory management on Tuesday after defaulting on its customers.
The Insurance Regulatory Authority (IRA) said claims will be capped at Sh250,000 as provided for in law, urging all enquiries relating to Resolution to be directed to the statutory manager for further direction.
IRA said Resolution was placed under statutory management because of its financial problems.
Policyholders of collapsed Resolution Insurance Company will be paid Sh250,000 each after it was placed under the care of the Policyholders Compensation Fund (PCF).
Resolution went into statutory management on Tuesday after defaulting on its customers and items at its head office were carted away by auctioneers.
“PCF will initiate the process of compensating policyholder claims within the next 14 days,” the agency said in a statement.
The Insurance Regulatory Authority (IRA) said claims will be capped at Sh250,000 as provided for in law, urging all enquiries relating to Resolution to be directed to the statutory manager for further direction.
Clients of the collapsed insurer will be expected to provide proof of their claims.
IRA said Resolution was placed under statutory management because of its financial problems.
“In particular, the company is not able to settle claims to the detriment of claimants, policyholders and other creditors,” the regulator said.
“The insurer is also not able to comply with statutory requirements relating to capital adequacy, submission of returns and governance structures.”
IRA added that efforts to rescue the insurer, including injection of additional capital, failed.
Resolution clients with the biggest exposure include those who had insured high-value assets such as motor vehicles, houses and industrial properties.
Customers with medical bills will also suffer as they will be forced to pay out of pocket.
Resolution was founded by Peter Nduati and its collapse comes after the company raised money from several investors and expanded into medical and general insurance business.
The company was initially a medical insurance provider (MIP), operating as both an insurer and broker, taking premiums for the less risky outpatient services and reinsuring the risky in-patient business with local insurers.
Legal changes ended the MIP business in 2012, a move that saw Resolution become a medical insurer and later moved into general insurance.
Earlier investors of Resolution included African Development Corporation (ADC) that was later acquired by London-based Atlas Mara.
In the latest transaction completed last year, UK-based Linkham Group acquired an unspecified stake in Resolution after buying out LeapFrog Investments.
Days to its collapse, the insurer had suspended underwriting of general business which is short-term.
