Policyholders in more than half a dozen collapsed insurance firms are in line for compensation after Treasury Secretary Henry Rotich published proposed changes to the law that prohibited such payments.
Mr Rotich has signed a Gazette notice proposing to delete regulation 11 of the Insurance (Policyholders Compensation Fund).
If legislators approve the changes to the regulations, the fund will be empowered to start tapping billions of shillings which have been lying idle since policyholders and insurance firms started contributing to the compensation kitty in January 2005.
The funds are deducted at the rate of 0.5 percent of premiums paid, equally born by the policyholder and the insurer.
The regulation being deleted only allowed the fund’s board to compensate policyholders of a firm which had been declared insolvent after January 2005.
The fund was valued at Sh5.93 billion in the year ended June 2016, according to an audit report by Auditor-General Office, amount that may have gone up in the three years. “The Fund has not been utilised since its establishment in 2004 despite four insurers going under statutory management,” he had said.
“This is because the current provisions of the law only allow compensation to claimants of an insolvent insurer.”