FAQ’s

The establishment of the Fund was as a result of reforms undertaken in the insurance sector in response to the collapse of several insurance companies which led to policyholder’s exposure to risk and losses of insurance benefits. The Fund’s mandate is to pay compensation which is intended to provide relief from the suffering policyholders undergo when an insurer collapses. By safeguarding the interests of policyholders, the fund contributes to the stability of the insurance industry by enhancing confidence.

The Fund was established on 24th September 2004 through legal notice 105 of 2004 signed by the Minister of Finance and commenced its operations on 1st January 2005.

There is no specific duration or time taken to declare an insurance company insolvent. Before a company is declared insolvent, the IRA appoints a statutory manager to try and revive the company. The statutory manager will take over the company for a specified time period but depending on the circumstances of the work, can apply for an extension with the Authority.  In the event that the manager successfully revives the company, it will not be declared insolvent. Should the manager be unable to revive the company, they will through a report inform the IRA who will file for a winding up petition at the courts. The period for hearing such a petition can only be determined by the legal process. It is thus difficult to quantify the duration it takes to declare an insurance company insolvent.

The insurance policyholders are the beneficiaries of the Fund. It is therefore the policyholders right to be compensated when the company providing them with an insurance cover is declared insolvent by a court of law.

What happens to policyholders of insurance companies that are under statutory management who have been sued by third parties? Can the law protect them from such legal proceedings during the period the insurance company is under statutory management?

No, Policyholders of the insurance Companies that collapsed before the fund started receiving contributions in January 2005 do not qualify for compensation from the fund. Stallion Insurance Company Ltd is one of these companies. Others include Access Insurance Company Ltd, Kenya National Assurance Co. Ltd, and Lakestar Insurance Co. Ltd.

• The IRA and the PCF are both stakeholders in the Insurance sector. However, IRA regulates and supervises the industry players while PCF compensates policyholders of the wound up Insurance Companies.
• Both bodies have been established under the insurance act.
• Both establishments are mandated to protect the interests of insurance policy holders and promote the development of the insurance sector.