Insurance regulator cancels license of matatu insurer Invesco

Troubled matatu insurer Invesco Assurance Limited has been prohibited from offering new insurance contracts with immediate effect.

The Insurance Regulatory Authority (IRA), through a notice dated August 14, said it has placed the firm under Statutory Management as per section 67C(2)(i) of the Insurance Act.

When a company is placed under statutory management, it ideally means that the regulator takes over its core functions, both managerial and operational.

As a result, the management of the company is locked out of running the company for the period under which it is under statutory management.

IRA in this regard, said it has appointed the Policyholders Compensation Fund (PCF) as the Statutory Manager for the firm, under the statutory management.

This means the Policyholders Compensation Fund will compensate the affected claimants.

"The insurer's existing policyholders are hereby advised to immediately seek alternative covers from other licensed insurers to ensure that there is no unnecessary exposure," IRA said.

Liquidation

The struggling matatu insurer has previously fallen into liquidation twice but was rescued by the High Court on both occasions, plunging the policyholders into confusion over the fate of their covers.

The most recent was the move by the regulator to stop the firm from issuing new covers in mid-December last year.

The regulator however lifted the order after a ruling by a court order in January this year.

The liquidation order was related to two court cases against the firm in Malindi and Nairobi, where the High Court judge Alfred Mabeya while lifting the orders said a liquidation order has serious consequences to the debtor company and should not just be used as a way of compelling debtors to pay.

In his ruling, he noted that once a petitioner has decided that a debtor company should be liquidated, it is insensitive for such a petitioner to turn back and claim that now the money has been paid hence calling for a hold to the process.

"That is not available," Mabeya noted.

The insurance regulator had also in February last year, put Invesco Assurance under liquidation following a petition, but it was salvaged by the High Court sometime in March which directed the regulator to reinstate the firm's license after a successful challenge.