Resolution Insurance Company placed under Statutory Management

The Insurance Regulatory Authority, IRA, has placed Resolution Insurance Company under Statutory Management.

IRA says the company has been facing a number of challenges particularly relating to its inability to meet its obligations and mitigate its inherent risks prompting the regulator to intervene on several occasions.

In a statement by the IRA, the commissioner of Insurance has appointed the Policyholders Compensation Fund (PCF) as the Statutory Manager of Resolution Insurance Company Limited for a period of twelve (12) months commencing 5th April 2022.

The PCF is a State Corporation set up pursuant to Section 179 of the Insurance Act to provide compensation to the claimants of an insurer placed under Statutory Management. 

Going forward IRA notes that Resolution Insurance Company Limited is not authorised to transact any new insurance business.

”Claims payable by PCF will be capped at Ksh 250,000. All enquiries relating to the company may be referred to the Statutory Manager for further direction.” Read the statement.

According to IRA, ”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.” Read the statement.

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

Adding that: ´´The insurer is also not able to comply with statutory requirements relating to capital adequacy, submission of returns and government structures.´´

The Authority notes that it has had numerous engagements with the Management and Board of the insurer to seek solutions to salvage the company.

Additionally, IRA has also considered the various initiatives undertaken by the shareholders to inject capital into the company. Unfortunately, the Authority says all 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 under Statutory Management as provided under Section 67 C (2) (i) of the Insurance Act.” says IRA.

IRA says this decision is in furtherance of the Authority’s commitment to ensure that policyholders and insurance beneficiaries are protected.

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

In July last year (2021), Linkham Group, an international firm, confirmed the completion of a deal to acquire a majority stake in Resolution Insurance Kenya.

The acquisition undertaken was meant to see the Linkham Group invest significant resources to revamp and fuel Resolution Insurance Kenya growth plans.

It entailed focusing on quality customer service delivery, adopting cutting-edge technologies, and risk management practices.

Resolution Insurance has since stopped underwriting of new non-medical business with effect from March 27, for a period of three months.

It will also not be renewing any expired contracts under the segment, as the company navigates through a tough 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 as it expanded into East Africa.

The firm has grown to become a tier-two underwriter offering various products from medical plans, travel plans, liability plans, property covers, motor covers and all other classes of general insurance.