IRA fires warning shot at Directline Insurance over irregular appointment

The Insurance Regulatory Authority (IRA) has today instructed the shareholders of Directline Insurance Company Limited to stop with immediate effect any physical involvement in the operations of the insurer.

Making this pronouncement, the Commissioner of Insurance and CEO of IRA Godfrey Kiptum directed the shareholders to comply with the Authority’s directive failure to which the Authority will take regulatory action provided under the Insurance Act.

In a letter addressed to the shareholders, the Commissioner pointed out that the alleged appointment of a Chairman of the company is irregular and in contravention of the provisions of the Insurance Act.

“The purported appointments of  Chairman, Directors and CEO is against the provisions of  the Insurance Act and the Corporate Governance Guidelines which require that such a persons be approved by the Commissioner before they can take up those positions,” he said.

The Commissioner further explained that the above requirement spells out the requirements for directors and management of insurance companies and the approval process to be followed.

He pointed out that the ultimate responsibility to have control over an insurance company is vested on directors who have been approved by the Authority and that the purported actions are outside the legal framework and thus considered null and void.

“It is only the approved directors that have the ultimate responsibility to have control over an insurer and the Authority, therefore, does not recognize any purported action taken to control the affairs of the insurer outside the legal framework and hence such actions are null and void, “he said.

By way of information, the Authority, in a bid to find a solution to the corporate governance issues affecting the company, has intervened in the management of the insurer as provided for under the Insurance Act by appointing three directors to the board of the insurer.

The Authority is mandated to protect the interests of consumers and insurance beneficiaries and the actions taken towards the management of Directline Insurance Company Limited are towards ensuring that the corporate governance issues the insurer is facing do not affect the insurance policyholders and beneficiaries.