The fund meant for compensating policyholders when insurance companies go bust wants to review the maximum amount that can be claimed from the current Kes15 billion fund.
Policyholders Compensation Fund (PCF) Chair Muthoni Wangai said as part of their new strategic plan, the entity will conduct a study to determine the capacity of the fund to increase the payout to insurers.
Currently, the fund that has accumulated over the years to hit Kes15 billion has an exposure of Kes2.7 billion as payouts for collapsed Resolution, United, Concord, and Blue Shield insurance companies.
Despite the high exposure, most policyholders have not come forward to claim their compensation, which is blamed on low payout and apathy due to the time taken to begin channeling funds to claimants.
“You notice also that we are limited, some of the claims will be very high but we are only able to pay Kes250,000 maximum,” said Ms Wangai.
“So those are some of the things we are working on. And to be able to do that the assessment of risk must be done properly and will be looking to engage the actuarial profession to be able to assess what can the fund pay against what the law says it should pay,” she explained.
Policyholders contribute 0.25 percent of their premiums to the compensation fund which is matched by their insurance companies which also pay 0.25 percent.
The finances are supposed to help settle claims when an insurance company is placed under statutory management or loses its license when it is unable to meet customer claims.
The fund, which was launched sixteen years ago has only started paying policyholders after authorities changed the law, paving the way for payment to policyholders after an insurance company went down.
The change in law, however, would not apply retrogressively meaning legacy failures have to wait until the court liquidated them to issue compensation to shareholders.
PCF began processing claims of companies that have gone bust over the years and have been wound up beginning with Concord and Standard Insurance while Resolution insurance policyholders started receiving compensation immediately after its collapse.
The fund owes Concord policyholders Kes392 million, Standard Kes172 million, and Resolution Kes107.6 million.
Blue Shield, whose case is still lingering in court, is owed Kes2 billion as compensation for policyholders while United is owed Kes1.2 million.
“We have received 245 claims out of which 88 have been processed, with a quantum of about Kes15 million. For Standard and Concord, we started compensation in August last year and so far we have paid Kes8 million,” PCF Managing Trustee, Mr William Masita, said.