Most public service vehicle (PSV) users in Kenya may be uninsured despite making insurance payments to Directline Assurance. This troubling revelation comes from lawyers representing businessman S.K. Macharia, who has accused “fraudulent directors” within the company of misappropriating Sh8 billion from policyholders.
Macharia, claiming to be the legal owner of Directline, has filed a court action seeking accountability for the alleged theft and the return of the company, which he asserts was illegally seized using a forged CR 12 form—an official document showing the current directors and shareholders of a company in Kenya.
Danstan Omari, one of Macharia’s lawyers, stated that 98 percent of PSV users are not actually insured. “They are misled into believing they are insured and are thus exposed to serious risks. Anyone involved in an accident should consider themselves alone without any support,” he warned, referring to vehicles displaying the Directline sticker.
Omari noted that they sought court intervention to compel the registrar of companies to accurately reflect the rightful ownership of Directline. Martina Swiga, another advocate for Macharia, indicated that the company’s CR12 had been illegally altered, and shares were transferred in violation of the law and the Insurance Act.
In light of these allegations and ongoing legal battles, Directline Assurance halted the issuance of new insurance policies earlier this month. This development follows a recent announcement that the company would cease operations entirely, terminating all employee contracts, including those of the board of directors.
“The board of directors of Directline has been dissolved, and all assets taken over by Royal Credit Ltd. All employees have been dismissed, and Directline will no longer issue insurance services,” Macharia stated.
For years, Directline Assurance has been a dominant player in Kenya’s PSV insurance market, controlling about 65 percent of the sector and generating an annual gross turnover of Sh4.26 billion.
However, as the company now finds itself in the middle of a legal battle and its operations halted, tens of thousands of policy holders are left in limbo with concerns of being unprotected in the event of accidents or incidents that need coverage.
Without coverage, they also risk lawsuits and penalties over non-compliance, and not being able to replace damaged vehicles. Additionally, with its operations halted, Directline being the biggest competitor leaves a big gap, leaving matatu operators and PSV owners with a few options to choose from.
The allegations of missing premiums also raise major concerns over the credibility of the insurance sector which is considered an extremely high-risk market.
