Directline Assurance, a major player in Kenya’s Public Service Vehicle (PSV) insurance sector, has recently made headlines due to its decision to cease operations by September 2024.
At its peak, Directline controlled approximately 77% of the PSV insurance market and collected premiums exceeding KSh3 billion between 2021 and 2022.
This decision to halt operations, however, comes amidst a backdrop of financial mismanagement claims, ownership disputes, and allegations of fraud that have plagued the company in recent years.
Directline’s closure was officially announced by S.K. Macharia, the chairperson of Royal Credit Limited, which owns Directline Assurance.
According to Macharia, the company’s decision to close stems from various operational challenges, including the freezing of its bank accounts by the Insurance Regulatory Authority (IRA).
This came after allegations of financial mismanagement involving over KSh7 billion, linked to the company’s former directors. Macharia accused the IRA of failing to take action against these directors, exacerbating the company’s troubles.
In addition to operational issues, Directline was embroiled in a contentious ownership and directorship dispute.
Macharia has been in a legal battle, accusing several former directors of fraudulent activities, including the alleged theft of funds and unauthorized transfer of shares.
This dispute escalated to a court case where Macharia sought to prosecute 14 former directors, claiming that they were responsible for siphoning off billions from the company and manipulating the firm’s ownership records.
However, the Director of Public Prosecutions (DPP) dismissed these allegations, stating that there was insufficient evidence of criminal wrongdoing.
The DPP classified the case as a civil matter related to shareholder disputes.
Complicating matters further, Macharia also alleged that a fake CR12 company registration document was in circulation, which distorted the true ownership and shareholding of Directline.
This fraudulent document has been used as justification for the company’s decision to suspend operations and notify banks that they will no longer handle insurance premiums.
Ultimately, Directline Assurance’s closure marks the end of an era in Kenya’s insurance industry.
The company’s struggles, stemming from internal management issues and external regulatory challenges, have led to a shutdown that leaves questions about accountability and the future of PSV insurance coverage in Kenya.
The extent of the alleged fraud and financial mismanagement within Directline remains a subject of intense scrutiny.
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