Insurers feel the pinch, change tack to survive tough economic times
Insurance sector firms are feeling the pinch of a tough business environment due to cash flow challenges.
The need to keep thriving in the harsh environment has forced one of the insurers, Resolution Insurance to restructure its service offering to clients.
In an internal memo to its staff the seen by Business Hub, the company says its board of directors and shareholders have been involved with capital raising that has led to significant delays, thereby exposing the company to heavy working capital constraints.
The firm said it has in consultation with the regulator decided to stop underwriting all new or renewing non-medical business with effect from March, 27, 2022 for a period of 90 days.
“This is a precautionary measure co safeguard the interests of all our policyholders while providing an opportunity to de-risk and restructure the general business book,” the memo signed by the Acting managing director Bernard Githinji said.
The firm said the current situation has affected its normal operations with the greatest impact being service interruptions from majority of service providers.
It added that the general insurance has experienced delayed settlement of claims and non-establishment of requisite reinsurance treaties placing the insurer in a huge cash flow risks should a claim arise. Another insurance firm Corporate Insurance Company Ltd is on the verge of insolvency after Auto Dealers Truckmart Africa Ltd sought for its dissolution over its inability to honour debt obligations. Truck Mart Africa filed a petition in High Court’s Commercial and Tax Division seeking to notify creditors of the insurance company about the move.
Tax Division
“Notice is given that a petition for the declaration of insolvency of the above named company at the High Court of Kenya” reads the petition by the lawyer representing Truck Mart, Otieno and Ambrose
In the petition to be heard before the Nairobi Commercial and Tax Division on June 9, 2022, Truck Mart Africa wants the insurance firm auctioned and the proceeds directed towards meeting some of its financial obligations.
On March 21 this year, the auto dealer through its lawyer, put out a notice calling on any creditors with the insurance company that want to be enjoined in the case.
“Parties desirous to support or oppose the making of an order on the said petition may give notice to the petitioners’ advocate not later than 4.00 of the afternoon before the petition is to be heard and appear at the time of hearing in person or by his advocate for that purpose,” read the notice.
