The Insurance Regulatory Authority (IRA) has dismissed Royal Media Services Director SK Macharia’s move to dissolve Directline Assurance.
In a statement, the regulatory authority termed Macharia’s move as null and void and that the decision contravened legal tenets.
According to IRA, Directline Assurance would continue with operations as licensed and approved by the Authority.
"All policies issued by Directline Assurance Company Limited remain in full force and effect and the insurer remains liable for any claims arising therefrom," read part of a statement by IRA.
IRA further dismissed the imminent transfer of Directline Assurance company's assets to Royal Credit Limited, stating the move as impossible.
Following its take on the matter, the regulator directed all policyholders of the insurer to continue with their operations per their insurance contracts.
IRA argued that it was the only body mandated with the responsibility of approving, suspending or cancelling the operations of any insurance company in Kenya.
"The insurer has been placed under heightened surveillance by the Authority and the Authority will take the necessary steps," IRA noted.
"This 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."
The declaration comes hours after Macharia announced the immediate shutdown of Directline Assurance following IRA's decision to freeze the company's bank accounts.
Macharia also announced the immediate termination of all the company's employees and that Royal Credit Limited would take over all assets owned by Directline.
The Royal Media Services boss faulted the regulator for failing to take action on Directline's former directors whom he accused of mismanaging Ksh7 billion belonging to the company.
