Kenyan insurance company Directline Assurance has ceased operations, citing financial mismanagement by previous leadership and a disagreement with the Insurance Regulatory Authority (IRA).
Directline terminated all employee contracts and dissolved its board.
Royal Credit Limited, chaired by S.K. Macharia, took over Directline’s assets. Macharia blames the closure on over Sh7 billion misappropriated by former Directline directors and accuses the IRA of failing to act.
“The board of directors of Directline has been dissolved and all the assets taken over by Royal Credit Ltd. All employees have been dismissed, and Directline will no longer issue insurance services,” Macharia said.
We found the clip that Citizen TV aired in which Royal Credit (RC) Chair Dr. SK Macharia allegedly announced the closure of DirectLine Assurance (DL):
—All DL employees dismissed
—Board of DL sent home
—All DL properties taken over by RC
—DL will no longer be issuing insurance pic.twitter.com/Zrt0p6maS4— Mwango Capital (@MwangoCapital) June 10, 2024
Directline has been a major player in Kenya’s motor insurance market, especially for Public Service Vehicles (PSVs).
The IRA, however, denies Directline’s claims and asserts the company is still operational.
“All policies issued by Directline Assurance Company Limited remain in full force and effect and the insurer remains liable for any claims arising therefrom. All policyholders of the insurer may continue with their operations under their insurance contracts,” IRA said in a statement.
The IRA accuses Directline of unauthorized transactions and seeks court control to protect policyholders.
“The purported actions are null and devoid of any legal effect and as such the insurer continues in full as licensed and approved by the authority.”
The IRA alleges Directline transferred KES 400 million to a company owned by Macharia without proper authorization. IRA aims to protect policyholders owed KES 2.08 billion as of April 2024.
“The Authority will take necessary steps as may be appropriate, pursuant to the provisions of the Insurance Act, CAP 487 Laws of Kenya, to ensure the sustainability of the insurer and protection of insurance policyholders’ interests,” IRA added.
Impact
The closure of Directline Assurance disrupts the Kenyan insurance market. Consequently, Royal Credit’s takeover aims to mitigate financial impact but raises questions about policyholder protection.
