A majority of motorists could be forced to wait longer to begin acquiring insurance services under Directline Assurance Company amidst growing concerns over the suspension of the company’s operations.
Appearing before the National Assembly Finance Committee on Thursday, November 14, Treasury Cabinet Secretary John Mbadi attributed the delays of insurance services by Direcline to several unresolved court cases.
According to the finance minister, the court cases emerged following a dispute among the shareholders who disagreed over certain appointments that were made within the company’s board of management.
This disagreement has left many operators in limbo as the company that controls more than 65 per cent of insurance services offered to Public Service Vehicles (PSVs) in the country remains suspended.
Royal Media Services chairperson S.K Macharia during a past media event.
“In mid-2019, shareholding disputes emerged, posing a risk to the insurer’s continued operations. The shareholders’ disputes are therefore still pending in various courts as well as the Insurance Appeals Tribunal,” Mbadi told the parliamentary committee.
The CS was forced to clarify the matter after the committee members expressed concerns regarding the termination of the insurance business by Directline Assurance.
According to the lawmakers, the termination of insurance services by Directline affected many public transport operators, with thousands of motorists facing auctions because the company was no longer compensating them.
In his response, CS Mbadi also noted that the current ownership documents of Directline Assurance Company were in the custody of majority shareholder SK Macharia, adding that over time, other shareholders have been brought onto the board but represented by trustees.
Further, the CS revealed that he held several meetings with the Royal Media Services (RMS) boss on the matter. Mbadi noted that during his meeting with SK Macharia, he realised that there was a misunderstanding on the matter of shareholding.
Following Mbadi’s statement, the CS was ordered to further furnish the committee with the number of policies held by Directline Assurance, the claims that have been made by motorists, and outline the pending claims.
The Finance Committee further ordered the minister to assess the ratios that the Insurance Regulatory Authority (IRA) uses to measure the financial variability of such an Insurance company.
In September this year, the RMS boss moved to court seeking to retain the ownership of Directline Assurance. Macharia through his lawyer Danstan Omari, accused a few individuals of attempting to take over the ownership of the company forcefully.
Speaking after filing a petition at the Milimani Law Courts on September 20, Omari narrated how SK Machari and his wife were ejected from Directline Assurance in what he termed as a hostile takeover.
As the legal and majority shareholder of the company, SK Macharia went ahead to suspend insurance services offered by the company.
Treasury CS John Mbadi signing for the loan facility, in Beijing on September 6, 2024.
Photo
Treasury