Fallen insurer Resolution Insurance has revealed that, at the time of its collapse, it had collected Ksh4.1 billion in premiums from policyholders, owed creditors and had claims from the insurance business totaling Ksh2.5 billion.
90% of the policyholders were clients of their medical insurance business. The firm collapsed after an expansion into the general and motor vehicle insurance business left it in need of recapitalization by its shareholders – something that failed to happen.
“Resolution Insurance owed creditors, had incurred claims worth Sh2.5 billion, and had collected premiums worth Sh4.1 billion as of December 31, 2020. The majority around Sh3.5 billion comes from medical business,” the Insurance Regulatory Authority (IRA) noted.
So what’s next for Resolution Insurance policyholders and the firm’s creditors?
The Policyholders Compensation Fund (PCF) was appointed Statutory Manager for the firm after it went into receivership. As a first step, it will conduct an independent audit of Resolution Insurance to verify the claims and amounts owed to creditors.
PCF will then announce the total value of compensation to policyholders. Compensation for each policyholder will be capped at Ksh250,000 each.
The Ksh250,000 compensation cap is in line with provisions of the Insurance Act. Creditors who are owed higher amounts and policyholders with high-value claims will need to wait for the firm’s liquidation to recover the amounts.
PCF had earlier assured policyholders that it would maintain the firm’s records to ensure a smooth process.
“PCF has forthwith taken over the operations of the company and has deployed necessary resources to ensure that the company assets and records are preserved for the benefit of policyholders, claimants and other stakeholders,” it noted in a statement.