Court Halts Withdrawal of Funds from Directline Assurance Account. The Insurance Regulatory Authority (IRA) has secured a temporary court order to halt the withdrawal of funds from Directline Assurance Co Limited’s account at Diamond Trust Bank, in a bid to protect the interests of policyholders. The order was issued by Commercial Judge Alfred Mabeya following allegations that funds meant for policyholders could be at risk.
Background of the Case
The court was informed that SK Macharia and Bashir Mburu had directed Diamond Trust Bank to transfer Sh400 million to an account belonging to Toy and Suna Holdings Limited, a company owned by Macharia. This transfer was intended to finance the development of stalls and low-cost housing at the Toy market.
Regulatory Concerns
The IRA argued that this move violated Section 191 (2) of the Insurance Act, which prohibits insurers from engaging in any business other than their registered insurance activities. The authority contended that the transaction was not related to insurance business and thus breached the insurer’s license terms.
Court’s Decision
Judge Mabeya, recognizing the urgency of the matter, certified the case as urgent and issued an order prohibiting the respondents—Directline Assurance Co Limited, Dr. SK Macharia, Bashir Mburu, Toy and Suna Holdings Limited, and Diamond Trust Bank—from making any withdrawals, transfers, or other transactions that could deplete funds from Directline’s bank accounts without IRA’s written authorization.
Additionally, the court imposed a temporary restriction preventing the respondents from instructing Diamond Trust Bank or other interested parties on any transactions involving the funds held in Directline’s name. Equity, Family, and I&M Bank were listed as interested parties in the case.
IRA’s Position
Through advocate Christopher Wairoma, the IRA stated that Macharia and Mburu had initiated a significant transfer of Sh400 million of the insurer’s funds. The IRA highlighted that an inspection was underway to facilitate enforcement actions aimed at protecting the interests of policyholders and beneficiaries, who are owed a total of Sh2 billion in unpaid claims as of April 30.
Next Steps
The judge directed that the application be served on the respondents immediately, with responses to be filed within seven days. Further directions are expected to be issued on June 18.
