Economy

Claimants get more time for Sh250,000 Concord State payout after snub

IRA

Insurance Regulatory Authority CEO Godfrey Kiptum. FILE PHOTO | NMG

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Summary

  • Only 17 out of 2,949 policyholders have shown up to claim the Sh250,000 State payout of Concord Insurance, which collapsed eight years ago, forcing the Policyholders Compensation Fund (PCF) to extend the period for making claims.
  • The fund has collected Sh13.5 billion by last December to pay claims of companies that have gone bust over the years and wound up beginning with Concord.

Thousands of policyholders have snubbed State payout of the first collapsed insurance raising questions about the identity of the owners of billions held by the insurance compensation fund.

Only 17 out of 2,949 policyholders have shown up to claim the Sh250,000 State payout of Concord Insurance, which collapsed eight years ago, forcing the Policyholders Compensation Fund (PCF) to extend the period for making claims.

The fund has collected Sh13.5 billion by last December to pay claims of companies that have gone bust over the years and wound up beginning with Concord.

The PCF said they had considered delays caused by Covid-19 lockdown and those who might be unaware to push period for making claims by a month.

"Further to the Public Notice issued on March 10, 2021, policyholders and beneficiaries of Concord Insurance Company Limited (in liquidation) are hereby notified that the payment period to lodge their claims has been extended for an additional 30 days. The new deadline is now May 14, 2021," said PCF managing trustee William Masita in a notice.

Concord 2,949 policyholders were supposed to collect Sh247 million.

Blueshield Insurance Company Limited that was placed under receivership in September 2011 has Sh2.2 billion claims out of which Sh2 billion will be paid out from the fund.

United Insurance that has been in receivership for 15 years owes policyholders Sh1.2 billion out of which PCF will pay Sh514 million while Standard Insurance owes Sh685 million and the fund will settle Sh172 million.

Over the years, Blue Shield Insurance, United Insurance Company, Standard Assurance Company, Concord Insurance Company, Access Insurance Company, Stallion Insurance Company Ltd and Lakestar Insurance Company all went under with policyholders claims.

They were put on receivership but their shareholders and the regulator have been caught up in endless litigation, leaving policyholders to wait decades without recovering their money.

This was despite the setting up of the Policyholders Compensation Fund in 2005 to cushion holders of insurance policies if companies are unable to discharge their services.

Insurance companies contribute to PCF through the payment of a levy equivalent to 0.25 per cent of their premium receipts and have amassed Sh13.5 billion by last December.

Last year, authorities changed the law paving the way for payment to policyholders immediately an insurance company went down.

The change in law, however, would not apply retrogressively, meaning legacy failures have to wait until the court liquidated them to issue compensation to shareholders.