Come for your payouts, policy holders of collapsed underwriters told

Nakuru,

Saturday, September 30, 2023

KNA by Anne Mwale 

Compensation payouts for a collapsed insurance company’s policy holder will now be made immediately an underwriter is placed under statutory management and its license cancelled by the Insurance Regulatory Authority (IRA).

Policyholders Compensation Fund (PCF) Acting Managing Trustee Mr Abudo Qonchoro-Mamo said the Treasury had waived the rule requiring that courts first conclude insolvency proceedings before the compensation process kicks off.

Previously policy holders of collapsed insurers had to wait for the conclusion of insolvency proceedings before the PCF fund compensated them.

Mr Mamo said currently a notification by the IRA over collapse of an underwriter triggers the start of the compensation process immediately.

The new changes by the Treasury come as a reprieve to policy holders of collapsed insurers as insolvency cases are windy and can last for years.

Speaking in Nakuru during a sensitisation drive dubbed ‘PCF Mtaani” the Acting Managing Trustee expressed concern that many policy holders were unaware that they were entitled to immediate compensation from the Fund following a change in law that paved the way for payment to policyholders immediately an insurance company goes under.

 PCF is a State Corporation under the National Treasury that was established through the Legal Notice No.105 of 2004 and commenced its operations in January 2005. 

The decision to establish the Fund was informed by the collapse of several Insurance companies prior to the year 2005.

 Mr Mamo who is also Director, Corporate Services at PCF said they have rolled out a sensitization engagement program targeting the 47 devolved units that is aimed at enlightening members of the public that the Fund is compensating claimants for all insurance companies declared insolvent and whose liquidation process has been cleared by the courts.

 He explained that the decision to establish the Fund was a key initiative in the reform of the insurance sector. Its primary purpose, he added, is to protect policyholders of insolvent insurance companies by compensating them.

 ‘PCF Mtaani” programme which came to an end in Nakuru on Friday after being carried out for five days has also been rolled out in Uasin Gishu and Embu Counties. 

 It is bringing on board media practitioners, Insurance agents, Boda Boda operators, matatu owners and other stakeholders.

The Acting Managing Trustee explained that claimants should fill the necessary forms with supporting documents and submit the same to PCF for verification and payment.

The fully completed claim compensation form should be supported by evidence of an existence of a claim with the company (claim form), evidence of quantum of the claim (Discharge Voucher or a Decree/Court Award in case of Third-Party Claimants). 

He disclosed that compensation to policyholders of the two underwriters is currently capped at Sh250,000 for each client in accordance with the law.

Creditors and policyholders with higher value claims will wait for the liquidation of the business to see how much more they can recover.

He said PCF has put in place an elaborate framework to ensure the successful implementation of the Compensation of policyholder claims.

Courtesy; KNA