Public service vehicles insurer Invesco Assurance recently went through a seven-day roller coaster during which the regulator issued the company with a liquidation notice and then withdrew it.
The Business Daily spoke to Invesco CEO Daniel Mugao on the events that preceded the liquation order by the Insurance Regulatory Authority (IRA on February 24, what it took to have it reversed on March 7 and the implications on the insurer, and how the company is trying to pick up the pieces.
What really happened for Invesco to find itself with a liquidation order?
In November last year, a law firm got orders to shut us down over unpaid claims but we felt those orders were not in order. We, therefore, filed an application to challenge them.
The court in December stopped the orders and directed us to start paying the law firm Sh1 million per month beginning December.
But for some reason, this was taken by the IRA to mean we had been ordered to pay the entire amount before December. The IRA, therefore, closed us despite us pleading with them that they were misinterpreting the court order.
I went and filed an application under certificate of urgency and the court listened to us and ordered that Invesco be reopened on March 2.
We then withdrew the application which was praying for the IRA Commissioner [Godfrey Kiptum] to be cited for contempt of court. We just wanted the business back.
By the time a regulator puts up a notice with such huge implications, the assumption is that you already had a discussion and you fully knew what was coming.
That was not the case. I was called on the morning of February 24 and told to appear at IRA at 11 a.m. I had a chance to talk to the [IRA] officials but they didn’t listen to me.
So around 3 p.m. I was given the liquidation letter and escorted by police and officers from the IRA to hand over the ownership of the property.
How was Invesco impacted by the seven days out of business? What was going on in your mind?
I thought about my career, the ambitions of the company and the over 200 jobs that were at stake.
It was bad that IRA did not just close the company but also ordered the Association of Kenya Insurers to cancel all motor certificates on each policy issued by Invesco Assurance.
We lost nearly the entire motor vehicle premium book amounting to Sh1.2 billion in just seven days because of that act.
When we reopened on March 2, I found myself starting from scratch and it is taking a lot of convincing to bring customers back.
We were collecting Sh4 million to Sh5 million premiums a day but now we barely collect Sh1 million.
Is there any recourse you are going to get from the regulator?
To do what? I don’t know. What happened already did. It is a pathetic situation. We have to start from scratch. The third-party claimants do not care and rightly so because they want their money.
Did the liquidation order remind you of February 2008 when Invesco was placed under statutory management and had to emerge about two years later? Has this shaken your experience as the CEO?
The 2008 circumstances are totally different from today. I was employed here in February 2022.
I have been a general manager in a blue chip company [Britam] and many other companies including Jubilee. I have worked for over 30 years.
I came here to turn around the company. But when we had just come up with a clear strategic plan, it is unfortunate we were thrown to the dogs. Right now, people are not keen to give me money for the turnaround.
Sometimes the devils can collude and make work very difficult for you. What can I say? I know there are many liabilities to pay and there are so many complaints to be addressed. But we need money.
What are you telling the claimants in light of this occurrence that seems to have made a bad situation worse?
We are putting a lot of effort and trying as much as possible to settle claims and we are asking them to understand us.
We are trying to look for big money somewhere and we are talking to our board members and shareholders about this so that we come out of this situation.
We need a lot of money to go out there and convince people that we are back in business.
How big is this ‘big money’ that you are looking for to stabilise Invesco’s operations?
That is a difficult question to answer but if I got Sh300 million to Sh500 million, I can push the business to start growing. But if you ask about what is enough that becomes difficult because there are other needs too.
Is insuring matatus a thankless business? There are only four insurers in this business out of about 37 general insurers.
Why would the rest not want to touch it if there was money to be made?
We are offering essential services in very strenuous circumstances and something structural in law and many other areas need to be addressed to make this business sustainable.
I wouldn’t say it is a thankless business. It is a business suffering from a societal problem. The manner of fraud that is involved in this business we run is one that you can’t even quantify; it is unprecedented.
Nearly every person is looking at how to make money from an insurance company doing liability insurance.
The chain from the day the accident occurs to the date a judgement is given in court, the prayers there, because of the nature of our society, is how to make an extra coin.
