CREDITORS and policy holders of Blue Shield Insurance will have to wait longer to get their dues after the court extended the statutory management period of the firm to November 20.
Blue Shield was placed under statutory management on September 17, 2011 after it was unable to honour claims lodged by its clients. The Commissioner of Insurance had obtained court order on October 10 to extend the statutory management period.
"Now take further notice that in exercise of powers conferred by section 67C (10) of the Insuarance Act, the statutory manager declares a moratorium on the payments by the said insurer to its policy holders and all other creditors, declared on September 16 up to November 20 in conformity with the statutory management period," said a statement by statutory manager Eliud Muriithi published in the Kenya Gazette dated October 25.
The Insurance Regulatory Authority attributed the firm's financial woes to its involvement in the public service vehicles insurance business which has been beset by soaring claims, fraud and litigation.
At the time of placing the firm under statutory management, IRA had not established how much the company owes because it did not file its statutory accounts with the regulator during that year. However according to year 2010 accounts, the firm owed over Sh1billion.
Blue Shield, which was established in 1983, operated until 2003 as a compliant composite underwriter. After entering the PSV insurance business, the firm started facing challenges forcing the IRA to increase its surveillance of the firm in 2008.
At the time of being placed under statutory management, Blue Shield policy holders were estimated at over 20,000 most being from the public service vehicle sector.
While still under statutory management which is supposed to establish whether the company can be revived, clients of the firm are also not able to access refunds from the policy holders compensation fund. The fund requires that a firm be wound up first before compensation can be processed.