Policy Compensation Fund (PCF) managing trustee William Masita said the fund will conduct a study to determine the new payout which could go to as high as Sh400,000 per customer.
The fund, whose resources had grown to Sh15 billion as at December 2020, is currently compensating policyholders of Concord Insurance and Standard Assurance which collapsed years ago under the current rates.
Policyholders contribute 0.25 percent of their premiums to the compensation fund which is matched by their insurance companies.
The government wants to increase the payout to policyholders of collapsed insurance companies from the current Sh250,000.
Policy Compensation Fund (PCF) managing trustee William Masita said the fund will conduct a study to determine the new payout which could go to as high as Sh400,000 per customer.
The fund, whose resources had grown to Sh15 billion as at December 2020, is currently compensating policyholders of Concord Insurance and Standard Assurance which collapsed years ago under the current rates.
“We plan to do an actuarial study in the next financial year and also to determine the sufficiency of the maximum amount we can pay,” Mr Masita said.
“It would possibly result in an upward review of the amount because of inflation. I wouldn’t give a number to it only to give an example from the banking sector is at Sh500,000 so any range between Sh250,000 and Sh400,000.”
Policyholders contribute 0.25 percent of their premiums to the compensation fund which is matched by their insurance companies.
The funds are supposed to help settle claims when an insurance firm is placed under statutory management or loses its licence when it is unable to meet customer claims.
Law reforms
The fund launched sixteen years ago has only started paying policyholders after authorities changed the law paving way for payment to policyholders immediately an insurance company goes down.
The change in law, however, would not apply retrogressively meaning legacy failures have to wait until the court liquidates the failed insurers before their customers can be compensated.
PCF has started processing claims with regard to insurers that went bust over the years and have been wound up beginning with Concord Insurance and Standard Assurance.
The fund received 90 claims for Concord where it has paid out 39 policyholders and rejected five claims. The rest are still being processed.
PCF announced it has begun payments for Standard Assurance where it expects 690 policyholders to claim Sh172.5 million.
Standard Assurance owes creditors Sh685 million and the fund will settle Sh172 million while United Insurance that has been in receivership for 15 years owes policy holders Sh1.2 billion out of which PCF will pay Sh514 million.
Blueshield Insurance Company Limited that was placed under receivership in September 2011 has Sh2.2 billion claims out of which Sh2 billion will be paid out from the fund.
