Black Clouds Hung Over Xplico Insurance As IRA Reject Appointment Of New Directors

By The Weekly Vision Team

There seems to be no light at the end of the tunnel for Xplico Insurance Company following a High Court ruling upholding a decision by the Insurance Regulatory Authority (IRA) to reject two directors the company had appointed to the board.

There have been boardroom battles at Xplico for a while now, which led to the IRA’s placing the insurance company under statutory management and appointing the Policyholders Compensation Fund (PCF) as the statutory manager. This means the statutory managers will take control and management of Xplico’s business and assets and may operate the underwriter until the IRA permits it to resume business on its own, subject to any terms and conditions the IRA may impose.

The insurance company is prohibited by the IRA from issuing any new insurance contracts as of December 8, 2023. Following the move, its existing policyholders are advised to immediately seek alternative coverage from other licensed insurers to ensure that there is no unnecessary exposure.

Troubles for Xplico began when a liquidation petition was filed by a creditor, Doris Mwaka Mwakwekwe, on March 17, 2022. This liquidation petition was heard before the High Court sitting in Malindi on June 9, 2022. Barely a month after IRA placed it under statutory management, High Court Judge Jirus Nyagah, through a ruling dated December 28, 2024, upheld IRA’s decision to reject the appointment of two directors to the firm’s board.

According to the case file, Xplico Insurance had appointed Arbaaz Qureshi and Heman Ranmal Haria to the board and prayed that the IRA be compelled to confirm and register them as board members. According to a statement dated January 26, 2023, and an affidavit sworn on that date by Aarbaz Qureshi, he is named as the operations manager of Xplico Insurance.

The court’s attention was drawn to the resignation of various board members on diverse dates between November 2022 and January 2023, as a result of which the company could not conduct its business. The company then appointed Mr Heman Ranmal Haria and Mr Arbaaz Qureshi as board members to replace those who had resigned. It forwarded their names to the respondent for approval, as required under the law.

However, IRA is said to have deliberately refused, neglected, or failed to approve the appointment of Mr Heman Ranmal Haria and Mr Arbaaz Quereshi as the Xplico board members without any justifiable reason or any colour of right. Consequently, Xplico’s business has been brought to a standstill and subjected to hardship. It was Xplico’s position that the respondent should be compelled to approve the appointment of Heman Ranmal and Mr Arbaaz Qureshi to the board to enable it to continue with its business operations and avert losses to itself.

However, the IRA, in a quick rejoinder, opposed the application through a replying affidavit sworn by Mr Godfrey Kiptum in his capacity as the commissioner of insurance and the executive officer of the IRA. In his affidavit, he averred that in the exercise of its statutory mandate, the IRA assesses the suitability of persons managing, controlling, or having significant ownership or significant beneficial interest in companies licensed under Section 68A of the Insurance Act to undertake insurance business in Kenya.

He further claimed that the IRA can only confirm the suitability of key persons involved in the ownership, stewardship, and management of insurers if the applicants fill out the requisite details on the respondent’s online portal with supporting documents.

However, as far as Xplico’s application was concerned, upon reviewing the applications, IRA noted that the information concerning Heman Ranmal and Mr Arbaaz Qureshi was not sufficient to prove that they were qualified to be directors under Sections 27A and 31 of the Insurance Act.

The judge ruled, “In the final analysis, I am not satisfied that the applicant’s application merits the exercise of discretion by this Honourable Court in favor of the applicants. It is hereby dismissed with costs.”.