Resolution Insurance Company placed under Statutory Management

The Insurance Regulatory Authority, IRA, has placed Resolution Insurance Company under statutory management.

The IRA says the company has faced a number of challenges, including its inability to meet its obligations and mitigate its inherent risks, prompting the regulator to intervene on several occasions.

In an IRA statement, the Insurance Commissioner has appointed the Policyholders Compensation Fund (PCF) as a statutory director of Resolution Insurance Company Limited for a period of twelve (12) months from April 5 2022.

The PCF is a state-owned company created under article 179 of the insurance law to indemnify the beneficiaries of an insurer placed under statutory management.

Going forward, the IRA notes that Resolution Insurance Company Limited is not permitted to engage in new insurance business.

“Claims payable by PCF will be capped at Ksh 250,000. All claims relating to the company can be directed to the statutory manager for further information.” Read the statement.

According to the IRA, “Despite the various intervention measures taken in accordance with the Insurance Act, Resolution Insurance Company Limited has continued to sink into operational and financial difficulties”. Read the statement.

Similarly, the IRA has denounced the inability of Resolution Insurance to settle claims to the detriment of claimants, policyholders and other creditors.

Adding that: ´´The insurer is also unable to comply with legal requirements relating to capital adequacy, reporting and government structures.´´

The AMF notes that it has had numerous engagements with the insurer’s management and board of directors to seek solutions to save the company.

In addition, the IRA also took into account the various initiatives undertaken by shareholders to inject capital into the business. Unfortunately, the Authority claims that not all measures have been successful.

“Having considered the continuing high risk and consumer exposure posed by the insurer, the Authority has, in the public interest, placed Resolution Insurance Company under statutory management as provided for in Section 67 C ( 2) (i) of the Insurance Act.” says IRA.

The IRA says that this decision is in line with the Authority’s commitment to guarantee the protection of policyholders and beneficiaries of insurance.

All existing policies cease to exist from April 5, 2022.

In July last year (2021), Linkham Group, an international company, confirmed that it had entered into an agreement to acquire a majority stake in Resolution Insurance Kenya.

The corporate acquisition aimed to see the Linkham Group invest significant resources to revamp and fuel Resolution Insurance Kenya’s growth plans.

This involved focusing on providing quality customer service, adopting advanced technologies and risk management practices.

Resolution Insurance has since stopped underwriting new non-medical business effective March 27, for a three-month term.

It will also not renew expired contracts in the segment, as the company navigates through a difficult acquisition process that has affected its capital.

Resolution Insurance was founded in 2002 by Peter Nduati as a medical insurance provider in Kenya, changing its name from Resolution Health to Resolution Insurance in 2013 when expanding into East Africa.

The company has grown to become a Tier 2 underwriter offering various products ranging from medical plans, travel plans, liability plans, property coverage, automobile coverage and all other classes of insurance general.

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Justin D. O'Neill