Kenyans whose funds are stuck in collapsed insurance firms will receive Ksh250,000 each as compensation claims under the Policyholders Compensation Fund (PCF).
This is after the government moved to activate payments from the fund to go towards the claimants. In a notice dated Monday, March 8, PCF along with the Insurance Regulatory Authority (IRA) announced that it would start with policyholders in the defunct Concord Insurance Company.
Concord Insurance company, a commercial and motor business, failed to settle claims and was placed under statutory management in 2013.
PCF Managing Trustee William Masita affirmed that the Ksh250,000 amount payable to each claimant is meant to cushion them after years of delay.
“The limit is an amount aimed at cushioning the policyholders and not necessarily the actual amount of the claims. This fund has put in place an elaborate framework to ensure the successful implementation of the compensation,” Masita stated.
Further, policyholders are expected to fill necessary forms before submitting them to PCF for verification.
PCF, established under Section 179 of the Insurance Act, was formed to protect policyholders of defunct insurance companies by providing them with compensation for their unsettled claims.
Established in January 2005, all policyholders and insurance companies would contribute funds to the PCF via a 0.25 percent levy on gross direct premiums written.
In the event that the insurance company becomes bankrupt, policyholders through PCF are able to be compensated according to the Insurance Act.
According to data in 2019, PCF estimated unsettled claims from policyholders amounting to Ksh4.5 billion. The news comes as a number of insurance companies have gone out of business due to financial debts.
The adverse effects were felt primarily during the Covid-19 pandemic period where insurance companies laid-off workers in a bid to stay affloat.