Motorists left stranded as court disputes paralyse Directline Assurance
By Maureen Kinyanjui |
The legal battles surrounding Directline Assurance have placed a burden on motorists and the public transport sector.
Thousands of motorists, especially public service vehicle (PSV) operators, may have to wait longer to access insurance services from Directline Assurance Limited following its ongoing suspension.
Treasury Cabinet Secretary John Mbadi attributed the delay to unresolved shareholder disputes that have escalated into multiple court battles.
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Appearing before the National Assembly Finance Committee on Thursday, Mbadi explained that the disputes stemmed from disagreements over board appointments, which have halted the company's operations since mid-2019.
"In mid-2019, shareholding disputes emerged, posing a risk to the insurer's continued operations. The shareholders' disputes are, therefore, still pending in various courts as well as the Insurance Appeals Tribunal,” Mbadi said.
The crisis has left many public transport operators stranded, as Directline controls over 65 per cent of insurance services for PSVs in the country.
Lawmakers raised concerns about the ripple effects of the suspension, noting that some motorists face auctions due to the company's inability to compensate claims.
"The termination of insurance services by Directline Assurance has adversely affected the public transport sector, leaving operators in financial distress," noted committee members.
In his statement, Mbadi disclosed that the ownership documents for Directline Assurance are currently held by SK Macharia, the majority shareholder and chairman of Royal Media Services.
Over the years, other shareholders have joined the board, represented by trustees.
The CS added that he has held several meetings with SK Macharia to address the matter. However, he acknowledged that there is a misunderstanding regarding shareholding, which has compounded the dispute.
In September, Macharia moved to court to retain ownership of Directline Assurance. Represented by his lawyer Danstan Omari, the Royal Media Services boss accused certain individuals of attempting a hostile takeover of the company.
According to Omari, Macharia and his wife were ejected from the company in what he described as a forceful removal.
As the majority shareholder, Macharia suspended the company's insurance services, further deepening the crisis.
Following Mbadi's presentation, the Finance Committee directed the CS to provide additional details on the policies held by Directline, the claims filed by motorists, and the pending compensations.
Lawmakers also instructed Mbadi to analyse the financial stability of the company using measures applied by the Insurance Regulatory Authority (IRA).
The legal battles surrounding Directline Assurance have placed a burden on motorists and the public transport sector.
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