What Happens If Your Insurer Collapses in Kenya: The Policyholders Compensation Fund

The short answer

If a Kenyan insurer is placed under statutory management or loses its licence, the Policyholders Compensation Fund (PCF) can pay you up to KSh 500,000 per claim. You must lodge the claim on the PCF's online portal within two years of the date the PCF publishes its compensation notice for that insurer. Miss the window and the right to compensation is gone.

Three things catch people out. The cap applies per claim, not per policy or per person, so a KSh 2 million motor write-off is still a KSh 500,000 compensation claim. The two-year clock is a hard bar written into the regulations, and the PCF has already published a "lapse" notice for one insurer this year. And the Fund only pays for incidents that happened before the day a manager was appointed; anything that goes wrong afterwards is not covered.

The rest of this guide sets out who is covered, what the cap really means, how the claim works step by step, and what the Fund will refuse to pay. Everything here comes from the Insurance Act, the 2010 Regulations, the January 2026 Gazette notice and the PCF's own published notices, not from press summaries.

What the Fund is, and what it is not

The PCF is a state corporation under the National Treasury. Section 179(1) of the Insurance Act (Cap. 487) says it exists to compensate "the claimants of an insurer placed under a manager appointed under section 67C(2) or whose license has been cancelled". It started operating on 1 January 2005.

It is not an insurer. It does not take over your policy or keep your cover running. It is a safety net that pays a capped amount on claims the failed insurer could not meet. Think of it as the insurance equivalent of the KDIC deposit guarantee for bank accounts, which also tops out at KSh 500,000 (how the KDIC guarantee works).

Since a 2014 amendment to section 179, the PCF's Board also has wider functions: monitoring the risk profile of insurers, taking part in the statutory management of a failing insurer, and liquidating an insurer when a court orders it. In practice this means the PCF is often the statutory manager itself. When KUSCCO Mutual Assurance was placed under statutory management on 10 March 2026, the Commissioner of Insurance appointed the PCF as manager for six months.

How an insurer ends up in the PCF's hands

Section 67C of the Act lists the triggers. The main ones are failing the capital adequacy test in section 41, leaving a court judgment on a policy unpaid for three months, being unable to pay debts under the Insolvency Act, or filing false returns. When one applies, the Commissioner, with the Insurance Regulatory Authority board's approval, can appoint a manager who takes over the company "to the exclusion of its Board of Directors".

The appointment runs for up to twelve months, and the High Court can extend it. Within those twelve months the manager must report on whether the insurer can be revived or should be liquidated. If liquidation follows, it happens under section 123 of the Act and the PCF can be appointed liquidator.

Two practical consequences for you as a policyholder:

• A moratorium usually follows. The manager can declare a halt on payments to policyholders, claimants and creditors. The KUSCCO Mutual notice declared a six-month moratorium from 10 March 2026 under section 67C(10) and (11). During a moratorium, the insurer is not paying claims, which is exactly when the PCF matters.
• Compensation does not start on day one. The PCF publishes a separate notice, "at an appropriate time", announcing that compensation has commenced and the portal is open. For Trident Insurance that notice was dated 14 April 2026; for Corporate Insurance, 12 May 2026. The two-year clock runs from that notice.

Who is covered: the "Kenyan policy" test

Regulation 13 of the Insurance (Policyholders' Compensation Fund) Regulations, 2010 says you are eligible only if the policy was a "Kenyan policy" at the material time, and you have been prejudiced by the insurer's inability, through insolvency, to meet a liability under it.

A Kenyan policy is any contract that amounts to carrying on insurance business in Kenya. Regulation 2 then carves out three things:

• a policy of re-insurance (the insurer's own cover is not yours);
• a superannuation scheme (pension and retirement funds have their own regulator and their own rules, see NSSF and pensions);
• a life policy issued before 1 January 2005, unless the policyholder opted into the scheme and had their premiums adjusted.

Everything else is in: motor, home, business, medical, travel, funeral and life cover written after 2005. The PCF's FAQ adds that insurers which collapsed before the Fund existed, naming Stallion, Access, Kenya National Assurance and Lakestar, are outside it entirely because no contributions were ever collected on those policies.

"Claimant" is broader than "policyholder". A third party injured by a vehicle insured with the failed company has a claim against that insurer and can lodge it with the PCF. The regulations treat all claims arising from one incident under one insurer's policies as a single claim, which matters for the cap below.

The cap: KSh 500,000 per claim, and why some claimants get KSh 250,000

The regulations do not fix an amount. Regulation 12 says the Board, in consultation with the Cabinet Secretary for the National Treasury, sets "the amount payable as compensation for different types or classes of insurance policies" and must publish it in the Kenya Gazette before it takes effect.

For roughly two decades that figure was KSh 250,000. On 9 January 2026 the PCF gazetted a doubling to KSh 500,000 (Gazette Notice No. 349). That notice was then revoked and re-issued as Gazette Notice No. 971 of 23 January 2026, which is the instrument now in force. It says the maximum "on any one claim, for all classes of insurance, shall be Kenya Shilling Five Hundred Thousand (KSh. 500,000)", in force from the date of publication.

The important qualifier is in the next sentence. The new limit applies to policyholders and claimants of any insurer that is placed under a manager or has its licence cancelled after the notice's commencement date. Insurers that failed earlier stay on the old figure. You can see both in the PCF's own 2026 notices:

So if you are reading an older guide that says KSh 250,000, it is not wrong for every claimant, only for claimants of insurers that failed from late January 2026 onward.

Two things the cap does not do. It does not scale with your premium or the size of your policy: a KSh 5 million life policy and a KSh 600,000 motor claim both stop at KSh 500,000. And it does not extinguish the rest of your claim. The balance remains a debt of the insolvent insurer, which you can pursue in the liquidation like any other creditor, usually for cents on the shilling.

The two-year clock

Regulation 15 is blunt: a policyholder who does not claim "within two years of the insolvency of an authorised insurance company shall not be entitled to claim any compensation from the Board". The PCF applies this from the date of its compensation notice. The Trident and Corporate notices both say a claimant who does not claim within two years of the notice "shall not be entitled to claim any compensation".

This is not a soft target. On 14 July 2026 the PCF published a notice that the compensation period for Invesco Assurance claimants lapses on 3 December 2026, and that anyone who has not lodged by then "shall not be entitled to claim any compensation". If you hold an Invesco policy or had a claim against an Invesco-insured driver, you have until that date.

The deadline is for lodging, not for the PCF finishing its verification. Lodge early, keep the claim number, and chase from there.

Step by step: lodging a claim on the PCF portal

The 2026 notices set out the same five steps for every insurer. The regulations behind them (regulation 14) require the claim to go to the Managing Trustee in the prescribed form, with whatever supporting documents the Board asks for.

1. Go to pcf.go.ke and open Online Services, then the Claims Portal.
2. Register an account. You get an email confirming registration.
3. Complete the online claim form. The regulations require "utmost good faith" and "a full and honest disclosure" of all material facts. Regulation 14(4) lets the Board reject a claim outright for non-compliance, so do not round numbers up or leave out an earlier partial payment.
4. Attach the documents listed in the portal's claims-process section. Expect to need your policy document, proof of identity, the claim you lodged with the insurer and its correspondence, and the evidence of loss you would have given the insurer (for motor, the police abstract and assessor's report; for a death claim, the death certificate and proof of beneficiary status). Our guide to claiming on an insurance policy walks through what a complete claim file looks like.
5. Keep the claim number emailed to you on submission. It is your reference for every follow-up.

The PCF's FAQ gives no processing time, and says the overall timeline depends on the statutory manager's work. The Fund has said it had paid KSh 444.3 million to 2,371 claimants between 2005 and 30 June 2026, which tells you two things: it does pay, and the average payment is well under the cap, because most claims are smaller than the limit.

If the PCF asks for information "on oath", that is regulation 14(3)(b) at work; a sworn affidavit from an advocate or commissioner for oaths is a normal part of larger claims.

What the Fund will not pay

Regulation 17 lists the exclusions. Three of them bite in real cases.

Incidents after the manager was appointed. Regulation 17(3): once a manager has been appointed under section 67C(2), the Board pays nothing on that insurer's policies "unless the claim relates to the liability of the said company arising out of an incident or event occurring before the date of appointment of the manager". If your insurer went into statutory management on 10 March and your car was stolen on 20 March, the PCF will not compensate you. Your cover effectively stopped on the appointment date. This is the single strongest reason to move your cover the day you hear your insurer is under management, rather than waiting to see whether it is revived.

Duplicated cover. Regulation 17(1) and (2): if another solvent insurer is also liable for the same loss under another Kenyan policy, the Fund does not pay. A business with two overlapping liability policies, or a vehicle on both a fleet policy and a private one, claims from the solvent insurer first.

Assignment of your rights. Regulation 16 makes compensation conditional on assigning to the Board, if it asks, your rights against the insolvent insurer and against any third party who caused the loss. The PCF steps into your shoes to recover what it can. If you have already been paid by someone else for the same loss, regulation 16(2) lets the Board count that against your compensation.

And, as above, pre-2005 life policies, re-insurance and superannuation schemes are outside the definition of a Kenyan policy, so there is nothing to claim.

The levy you have been paying all along

The Fund is not taxpayer money. Regulation 9(3) requires "every insurer and every policyholder" to contribute "an equal sum of one-quarter per cent (0.25%)" of the premium. Your insurer collects your 0.25% when the policy starts or renews, adds its own 0.25%, and remits both to the PCF within 30 days (regulation 9(4)). An insurer that keeps the money owes a penalty of 5% per month, and under section 179(9) of the Act its directors become personally and jointly liable for unpaid contributions 90 days after the due date.

On a KSh 40,000 comprehensive motor premium, that is KSh 100 from you and KSh 100 from the insurer. It should appear as a separate line on your debit note or receipt, often labelled "PCF levy" or "Policyholders Compensation Fund". If it is missing, ask why: an insurer that is not remitting the levy is telling you something about its own finances.

The PCF's FAQ says 10% of contributions go to administration and 90% is invested in government securities, which is where the compensation money sits until it is needed.

What to do the day your insurer goes under

• Check the PCF notices page and the IRA website, not social media. The notice will say whether the insurer is under statutory management or in liquidation, and whether compensation has commenced.
• Move your cover immediately. Because of regulation 17(3), losses after the manager's appointment are not compensable, and a moratorium means the insurer is not paying anyway. Buy a new policy for the remaining period; do not wait for a refund of the unexpired premium, which becomes a creditor claim in the insolvency. For motor cover, driving on a policy from an insurer under management does not protect you from a third-party claim in any useful way (comprehensive versus third-party cover).
• Gather your file now. Policy schedule, receipts showing the premium and levy, the claim you lodged and every letter back. Insurers under management lose staff fast and your paper trail may be the only one.
• Lodge on the portal as soon as the compensation notice is published, and diarise the two-year date.
• If your claim exceeds KSh 500,000, lodge the PCF claim for the capped amount and file a proof of debt with the liquidator for the balance. The two are not alternatives.
• Business policyholders with WIBA or liability cover should tell their employees and their own customers that cover has moved, since third-party claimants can also claim from the PCF (business insurance and WIBA).

Reducing the risk before you buy

The PCF exists because insurers do fail, and 2026 has seen three placed under statutory management. The cap is modest relative to a house, a life policy or a serious injury claim, so prevention matters more than the safety net.

• Buy only from an IRA-licensed insurer and check the licence each renewal. Section 67C gives the regulator strong tools, but they are used after the trouble starts.
• Spread large exposures. A life policy of several million shillings with one insurer is exposed to one failure with a KSh 500,000 backstop. Term life from one insurer and a funeral policy from another, or a second life policy, spreads the risk (do you need life insurance, last-expense cover).
• Prefer insurers that pay the levy visibly and settle claims promptly. Late claim payment is one of the section 67C triggers; an insurer leaving court judgments unpaid for three months is on the regulator's list before it is on yours.
• Use the comparison tables to see what is on offer before renewing with the same company out of habit: compare insurance providers.

Frequently asked questions

Does the PCF cover medical insurance and SHA? Private medical insurance from a licensed insurer is a Kenyan policy and is covered up to the cap. SHA is a statutory scheme, not an insurer under the Insurance Act, and is outside the PCF (how SHA works).

My insurer is under statutory management but still running. Should I keep paying premiums? Premiums paid after the insolvency are themselves one of the rights regulation 16 may require you to assign to the Board, which tells you how the regulations regard them. More importantly, losses after the manager's appointment are not compensable. Take independent advice, but most policyholders are better served by new cover with a solvent insurer.

Is the KSh 500,000 per policy or per claim? Per claim, and all claims from a single incident under one insurer's policies count as one claim. Two separate accidents are two claims.

What if I claimed from the insurer before it collapsed and was never paid? That unpaid claim is exactly what the Fund exists for, provided the incident happened before the manager's appointment date. Lodge it on the portal with the insurer's acknowledgement.

Can I claim if I am a third party, not the policyholder? Yes. The Act and the PCF's notices refer to "policyholders and claimants". A third party injured by an insured driver, or a supplier with a claim under a business policy, claims in the same way.

What happens to the part of my claim above the cap? It survives as an unsecured claim against the insurer. In a liquidation you file a proof of debt and share in whatever is recovered after secured creditors. Keep the PCF's payment record; the liquidator will deduct it.

How is the PCF different from the Investor Compensation Fund? The Investor Compensation Fund sits under the Capital Markets Act and covers losses caused by licensed stockbrokers and investment firms, not insurers. If your problem is a broker rather than an insurer, see what to do when a broker will not pay out.

Sources: Insurance Act (Cap. 487) ss.67C and 179, Kenya Law consolidated text; Insurance (Policyholders' Compensation Fund) Regulations, L.N. 86 of 2010 as amended; Kenya Gazette Notices No. 349 of 9 January 2026 and No. 971 of 23 January 2026; PCF public notices on Trident Insurance (14 April 2026), Corporate Insurance (12 May 2026), Invesco Assurance (14 July 2026) and KUSCCO Mutual Assurance (March 2026); PCF compensation page and FAQ. Payout totals as stated by the PCF to the Kenya News Agency, August 2026. Figures checked 24 October 2026.