Jitters as PSV insurer sinks with Sh1.5b of clients' money

Matatu wreckage at a crash scene. Invesco has been facing a crisis after being unable to settle claims on what has been attributed to a liquidity crisis. [Kpsang Joseph, Standard]

Thousands of clients and suppliers have been thrust into uncertainty after Invesco Assurance Company, the firm offering covers to public service vehicles, (PSVs) collapsed with hundreds of millions of shillings in client cash, insurance claims, and creditor funds.

Matatu owners and public transport bus operators will be waiting eagerly to recover their funds from the failed insurer - a process that in the past has been painfully long and agonising.

The State’s Policyholders Compensation Fund (PCF), has taken over the firm as the statutory manager, said the insurance regulator in a statement.

“Invesco Assurance Company has been placed under liquidation through a decree of the court dated 6th February 2023 issued in the High Court at Nairobi in Insolvency Petition No. E155 of 2019,” said the Insurance Regulatory Authority (IRA) chief executive Godfrey Kiptum in a statement.

PCF is expected to announce in the next few days the total value of compensation to policyholders –which will be capped at Sh250,000 for each client.

“The Policyholders Compensation Fund will compensate the affected claimants as provided in section 179 in the Insurance Act Cap 487 Laws of Kenya,” said Mr Kiptum.

Creditors and policyholders with higher value claims will wait for the liquidation of the business to see how much more they can recover.

Relative stability

Invesco becomes the second underwriter to collapse in as many months following a similar failing of Resolution Insurance in April last year, raising jitters about the financial state of underwriters in the country’s market.

The local insurance sector had enjoyed relative stability for years since the collapse of Concord Insurance in 2013.

The IRA last year placed Resolution under statutory management because of its financial problems, stating that efforts to rescue the insurer, including the injection of additional capital, had failed.

This is after its shareholders failed to recapitalise the business.

Invesco has been facing a crisis after being unable to settle claims on what has been attributed to a liquidity crisis.

The cash crisis at the insurer had been revealed in a court case where the firm had appealed seeking to challenge a decree ordering it to pay Sh53.28 million to 60 victims of road traffic accidents.

The IRA had since 2019 rejected the company’s financial performance reports, citing “data inconsistency and non-compliance with submission requirements”.

Invesco had in 2018, the last time its financial filings were in order, collected Sh1.5 billion in premiums and controlled a market share of 1.2 per cent of general insurance premiums.

Following this court decree, Invesco Assurance Company has consequently been stopped from issuing insurance policies and therefore not authorised to enter into any new contracts of insurance, said IRA.