The fund has grown from Sh13.5 billion in December 2020 on few claims from policyholders of companies that went bust over the years.
The latest data by the insurance regulator shows that as the Policyholders Compensation Fund (PCF) started making payments to Concord Insurance, only 17 out of 2,949 policyholders showed up to make claims.
PCF has now announced it has begun payments for Standard Assurance where it expects 690 policyholders to claim 172.5 million.
The money being held by the insurance compensation fund has increased by 11 percent to Sh15 billion despite drawing cash to pay off policyholders of collapsed insurers.
The fund has grown from Sh13.5 billion in December 2020 on few claims from policyholders of companies that went bust over the years.
The latest data by the insurance regulator shows that as the Policyholders Compensation Fund (PCF) started making payments to Concord Insurance, only 17 out of 2,949 policyholders showed up to make claims.
PCF has now announced it has begun payments for Standard Assurance where it expects 690 policyholders to claim 172.5 million.
The Fund only pays up to Sh250,000 in cheques to claimants and the rest of the funds are forwarded to the liquidator if claimants do not come forward within two years.
“In undertaking this process, the Fund will compensate the policyholder claims of Standard Insurance Co. Ltd and subsequently undertake compensation of claimants of the other insurers,” PCF Managing Trustee William Masita said.
“The Sh250,000 limit is an amount aimed at cushioning the policyholders and not necessarily the actual amount of their claims,” he said.
Mr Masita said the Fund was compensating claimants for companies that have been declared insolvent and whose liquidation process has been approved by the courts of law.
The fund is making its second payout since it was set up over 16 years ago.
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 PCF 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 has amassed Sh15 billion.
Authorities changed the law paving way for payment to policyholders immediately an insurance company goes 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.
The Insurance Regulatory Authority began processing claims of companies that have gone bust over the years and have been wound up beginning with Concord and Standard Insurance.
Standard Insurance owes claimants Sh685 million and the fund will settle Sh172 million, while United Insurance that has been in receivership for 15 years owes policyholders Sh1.2 billion out of which Pcf will pay Sh514 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.
