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Home Front Page

Citizen Insurance Company under liquidation

by Chikondi Chiyembekeza
22/08/2014
in Front Page, National News
2 min read
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The Supreme Court of Appeal has appointed Reserve Bank of Malawi (RBM) Governor Charles Chuka to be liquidator of Citizen Insurance Company which was placed under statutory management on August 26 2011 based on the Financial Services Act 2010.

Citizen Insurance Company was found by the RBM to be in gross breach of the Financial Services laws as management and shareholders of the institution failed to address a number of issues that potentially threatened the interests of policyholders and the public.

Confirmed development: Ngwira
Confirmed development: Ngwira

The purpose of placing the insurance company under statutory management was to determine its viability.

RBM, based on its assessment, found that the company was insolvent, and in line with Section 72 (4) of the Financial Services Act, the governor proceeded to petition the court for a winding up order which was granted on Tuesday.

RBM spokesperson Mbane Ngwira on Thursday confirmed the appointment of Chuka, who is the registrar of financial institutions, based on a Supreme Court ruling made on Tuesday in Blantyre.

“He has been awarded to be the liquidator to wind up the insurance company. This means that he will have to settle all the debts and premiums that the company owes its debtors and the remainder will be given back to the shareholders,” he said in a brief interview.

Chartered insurance practitioner Duncan Bvomerani told The Nation yesterday this means that Citizen Insurance will have to be deregistered under the Companies Act and that all assets held by the company will have to be disposed of accordingly.

“This means that all the policy holders will face the music; they will suffer. This is a blow to the insurance industry because it will result in the reduced number of insurance companies. Consumer confidence [in the insurance industry] will also suffer,” he said.

Bvomerani, who is also programme director of GIST insurance career centre, said the ruling by the Supreme Court is final, which means the insurance firm has died a “natural death” and the RBM will have to take care of all outstanding claims the company had.

He said when the company was under statutory management, policy holders were being turned back by the RBM when they went to claim, necessitating the need to have a consumer protection body which could look into the interest of the customers.

This is the first time for an insurance company to be ordered to wound up in Malawi, and Bvomerani said this is a wake up call for insurance companies that are failing to meet their obligations.

The case was presided over by Chief Justice Anastasia Msosa, judges Jane Ansah and Richard Chinangwa.

 

 

Tags: Charles ChukaCitizen InsuranceCourtReserve Bank of Malawi
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