Boost for Invesco as court annuls liquidation order

The wreckage of a matatu and a lorry involved in an accident in Ngata area along the Nakuru - Eldoret Highway on November 6, 2023. [Kipsang Joseph, Standard]

Invesco Assurance Company was declared dead on October 18 this year.

If it were in the medical field, the attending doctor would have written a death certificate in readiness for a mortician to tell what killed it.

In the legal world, the judge who ordered that the firm should be liquidated as it could not meet its obligations would have been the doctor.

The mortician, in this case, a receiver manager, then got to work to ascertain what could have sent the insurer to its deathbed. But as Invesco’s autopsy got underway, a new order cancelling its liquidation on December 23 handed the insurance giant a new lease of life.

But even as he handed the insurer a lifeline, Commercial Court Judge Alfred Mabeya was of the view that if a company goes under, then it should not be revived to continue reeling and sinking into further problems.

According to the Judge, liquidation cases ought not to be used to arm-twist companies to pay their debts.

“I point out here that liquidation petitions are not to be used to arm-twist debtors to pay or settle. Once a petitioner has decided that a debtor company should be liquidated, it is insensitive for such a petitioner to turn back and say: ‘oh wait a minute, I have received my money back. Hold the process. That is not available,’” he said.

He continued: “A liquidation petition as is liquidation order is serious business. Advertising any of the same has serious consequences for the debtor company. In the public interest, a company that should go under in all fairness should be left to go rather than be left to sink deeper into debt.”

The judge observed that a court in Malindi had also lifted Invesco’s liquidation orders. Ten individuals, who were owed by the insurance firm, had filed the case.

The liquidation process, as asked by Salesio Kinyanjui Njagi, Gregory Mwaniki Karunga, Alisa Njeri, Jackleah Wangari, Nyaga Nthia, Alice Kageni Ndwiga, Emmaculate Wanjiru Marigu, Juliet Muthoni Nthiga, Vanessa Kambi and Nancy Muthoni Kinyua kicked off on October 31, 2023.

However, Invesco and the 10 went back to court with a signed consent and pleaded with the judge to lift the orders. Justice Mabeya ordered the official receiver to surrender Invesco to its directors, giving it a lifeline.

No insurance industry player was willing to insure the matatu sector, owing to recklessness and grand theft that left firms in the red.

Those who tried, died leaving Invesco as the last man standing. But a look at the cases filed by the firm and against it reveals why it was only a matter of time before it found itself in the same rut. After the firm reincarnated in 2010, the government made a deal with public service vehicle owners under the aegis of the Matatu Owners Association (MOA) to buy out the firm. 

It was re-licensed by the commissioner of insurance to resume trading on January 18, 2010.

Invesco emerged from statutory management, a major fete, given that it was the first public service vehicle (PSV) insurer to come out of bankruptcy at the time.

Numerous other insurance firms, which have focused on the PSV sector, have collapsed under the weight of huge claims, many of them fraudulent.

Insuring matatus has been a graveyard for many insurers and some that have taken a beating and gone on to collapse due to fraudulent claims and mismanagement include Stallion, United, Lakestar, Liberty, Access, Invesco and Standard Assurance Companies.

MOA played an instrumental role in its resuscitation, and when it resumed business in 2010, it emerged as among the key shareholders with an 80 per cent stake.

The acquisition of the firm by matatu owners was expected to be among the things that would play in favour of the insurer and would contribute to its success.

MOA, itself well versed with the workings of public transport, had hoped to tame a myriad of fraudulent claims that have bedevilled PSV underwriters. Fraud is a major concern in motor vehicle insurance, where authorities have estimated that more than 40 per cent of the claims are fake.

In the case of Invesco, the statutory manager at some point noted that an audit had shown 630 out of 1,000 claims had been fraudulent.

MOA was also banking on the more than 5,000 of its members as well as the goodwill from the industry to support it and even view it as one of their own.

A decade later, the same members are unsympathetic and have dealt with Invesco in the same manner they would anyone else.

However, court cases tell of a matatu industry that fattened the steak for slaughter and is now eating each tendon and skeleton in a voracious leap.

And now, as Ivesco faces fresh turmoil, matatu owners will be on their own, left high and dry to cope with the same cartels the industry instituted.

The firm admitted that in the last five years, there have been symptomatic of abnormal claims.  

Other than overwhelming claims from the PSV sector and other debts, Invesco also had to contend with fraud by rogue insurance brokers and agents, who would take money from clients taking cover with the insurer but fail to remit the money.

The brokers and agents owed the firm Sh300 million. It has emerged that vehicles forge insurance certificates, with those involved in accidents claiming compensation using the same documents.

At the same time, those making claims press parallel suits, leading to double or triple compensation.

In a separate case, Invesco claimed that it had flagged fraudulent cases worth Sh 600 million, which have led to its haemorrhage.

The firm alleged that its countrywide investigations unearthed more than 2,000 claims, which were fictitious and forwarded the same to government investigative agencies to press charges against the claimants.

In its court filings seeking to halt all claims until investigations are concluded, Invesco added that it has been compelled to pay more than Sh147 million under duress, and some of the paid claims have turned out to be forgery.

According to the firm, at least 645 insurance claims were flagged in all four remaining matatu insurers, and the pleadings in all of them appear to have been recycled.

“All four remaining major PSV underwriters are inundated with bogus claims and abnormal claims inflows, leading to a very unstable and highly volatile possibility of all PSV underwriters being overhauled,” Invesco claimed.

Worse still, are those who inflate accident claims and get excessive awards from the courts.