In a significant and unexpected move within the insurance sector, billionaire S. K. Macharia, chairman of Royal Credit Limited, has announced the immediate closure of Directline Assurance Company. This decision comes amidst allegations of financial mismanagement involving a staggering amount of over Sh7 billion, which Macharia attributed to the former directors of Directline. The closure entails the termination of all Directline employees and the dissolution of its board.
The catalyst for this abrupt shutdown was the Insurance Regulatory Authority (IRA)’s decision to freeze all Directline bank accounts, which further exacerbated the financial turmoil within the company. Directline Assurance, known for its prominent position in Kenya’s insurance market with a significant 60.79% market share in motor commercial PSV insurance, had been facing substantial underwriting losses, particularly in the first half of 2023.
Royal Credit Limited, under Macharia’s leadership, has taken over all assets owned by Directline Assurance in an effort to mitigate the fallout from its closure. Despite this acquisition, all insurance services provided by Directline Assurance have been immediately suspended, leaving policyholders and stakeholders uncertain about the future of their insurance coverage.
The closure of Directline Assurance marks a pivotal moment in Kenya’s insurance landscape, raising concerns about regulatory oversight and industry stability. Macharia’s criticism of the IRA for allegedly failing to address the financial mismanagement adequately underscores potential gaps in regulatory enforcement.
As the situation unfolds, industry observers and stakeholders will be closely monitoring Royal Credit’s handling of the transition and the measures implemented to safeguard the interests of policyholders affected by Directline Assurance’s closure.