Resolution Insurance has been stopped from transacting any new business by the Commissioner of Insurance, after sliding into operational and financial difficulties and was unable to settle claims from clients.
Commissioner of Insurance Godfrey Kiptum on Tuesday said several interventions to rescue the company bore no fruit, resulting in the firm being placed under statutory management.
“The company has been facing a number of challenges particularly relating to its ability to meet its obligations and mitigate its inherent risks, inviting the Commissioner to intervene on several occasions,” Mr Kiptum said in a statement on Tuesday.
“Despite the various intervention measures taken as provided for by the Insurance Act, Resolution Insurance Company Limited has continued to slide into operational and financial difficulties.”
He added: “In particular, the company is not able to settle claims, to the detriment of claimants, policyholders and other creditors. The insurer is also not able to comply with statutory requirements relating to capital adequacy, submission of returns and governance structures.”
The commissioner said the Insurance Regulatory Authority (IRA) had met with the company’s management and board to salvage the company and considered shareholder initiatives to inject more capital into it.
“Unfortunately, all these measures have not been successful.
“Having considered the continued high risk and consumer exposure posed by the insurer, the Authority has, in the best interest of the public, placed Resolution Insurance Company Limited under Statutory Management as provided for under Section 67 C (2) (i) of the Insurance Act.
“This decision is in furtherance of the Authority’s commitment to ensure that policyholders and insurance beneficiaries are protected.”
He appointed the Policyholders Compensation Fund (PCF) as the statutory manager of the company for 12 months, starting on April 5, with the statement adding that all existing policies ceased to exist effective that date.
PCF, in a separate statement, said it had taken over the operations of the insurer and deployed resources to preserve its assets and records.
“Pursuant to the appointment, PCF has declared a Moratorium on the payments by the said insurer to its policyholders and all other creditors for a period of 12 months starting today,” PCF stated.
“With the declaration of the Moratorium, policyholders have been shielded against claims or orders that would have ordinarily been paid by Resolution Insurance Company Limited (Under Statutory Management).”
It also added that it would start the process of compensating policyholder claims within the next 14 days.
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