As Kenya prepares to operationalize compulsory marine cargo insurance this year, industry stakeholders can draw valuable lessons from Uganda’s earlier implementation, which takes effect on February 1, 2025. Uganda’s approach provides a blueprint for success — one that blends regulatory enforcement, market readiness, and aggressive stakeholder engagement.
Speaking to The Nile Post when Uganda made it compulsory to procure MCI, Mr. John Bukenya, a member of the Non-Life Technical Committee at the Uganda Insurers Association (UIA), underscored the profound national economic benefits of mandating local marine insurance.
“As insurers, we know this will help protect and grow Uganda’s economy. An economy can’t grow without insurance,” said Bukenya. “Goods lost or damaged in transit represent a direct leakage from the economy. But if those goods are insured, insurers will pay back, preserving value and business continuity.”
Kenya’s Insurance Regulatory Authority (IRA) has issued a directive mandating that all marine cargo imports be insured through locally underwritten policies. While the initial rollout was scheduled for February, implementation has been deferred to later this year to give the industry adequate time to prepare.
Uganda’s experience underscores a critical lesson for Kenya: successful execution depends not just on regulation, but on thorough preparation, clear stakeholder communication, and robust systems that build confidence among importers and industry players.
Bukenya emphasizes that cargo loss due to lack of insurance can have cascading economic impacts, from business collapse to job losses and tax revenue dips.
“A person importing goods worth UGX 3 billion who suffers a loss without insurance might go out of business. That means workers laid off, families affected, and the taxman losing revenue. Compulsory local marine insurance plugs these leakages.”
Kenya must recognize marine insurance not merely as a compliance obligation, but as a macroeconomic shock absorber. It keeps businesses afloat after loss events, stabilizes cash flow for importers, and retains insurance premiums within the domestic economy.
Uganda’s slow initial progress was attributed to inadequate sensitization. Some traders preferred foreign covers, while others misunderstood the product.
“At first, we hadn’t done enough outreach,” Bukenya admitted. “People didn’t understand local marine insurance or how to pay. We had to engage traders, shippers, importers, and their associations.”
Kenya’s insurance industry must intensify engagement ahead of the proposed deadlines. Outreach campaigns should go beyond policy briefings to involve practical education on claims processes, cost advantages, and legal enforcement mechanisms.
In Uganda, the presence of local insurers and regulators ensures accountability in claims settlements.
“If a claim is payable, there’s no way you won’t get paid. Our regulator is here. But if the insurer is foreign, there’s little recourse when they delay or reject claims.”
Kenya’s regulator must insist on capacity audits before licensing players for marine insurance. There must be clear claim processing timelines, ombudsman access, and enforcement measures to avoid reputational damage that might discourage importers from complying.
To reduce concentration risks and lower premiums, Uganda’s insurance players formed a marine insurance consortium that spreads large risks among local underwriters.
“Any UGX 1 billion risk is shared equally. All insurers have reinsurance treaties. Combined, we have a capacity above UGX 300 billion. Even oil imports are manageable.”
Kenya’s insurers should establish or strengthen consortia to manage high-value import risks. Pooling ensures that no single insurer is overwhelmed and that premiums remain affordable — a critical incentive for traders to adopt the policy voluntarily
Uganda’s strategy combines a punitive cost for non-compliance (1% of cargo value) with a competitive local premium (0.3%) to encourage adherence.
“We are telling traders: If you don’t take local cover, you’ll pay a penalty three times higher.”
Kenya’s IRA can adopt a similar carrot-and-stick model. However, emphasizing service quality, speed of claims, and economic patriotism may win more trust than punitive enforcement alone.
Uganda is pushing digital policy sales and translating documents into local languages to broaden insurance penetration.
“You should be able to buy travel insurance from your phone at the airport. Policies are now being translated into Luganda, Luo, and other languages. We must speak the people’s language.”
For Kenya, investments in InsurTech, mobile-based onboarding, and language localization can simplify access, especially for SMEs and micro-importers who may not fully grasp insurance jargon.
As Uganda activates its local marine cargo insurance framework this February, its experience offers a critical reference point for Kenya. The policy’s success will not rest solely on legislation but on industry coordination, service delivery, capacity building, and public trust.
“Marine insurance will become one of the fastest growing products in Uganda because it’s compulsory — and because we’re paying claims,” Bukenya predicted.
For Kenya, success will mean increased insurance penetration, strengthened domestic underwriting capacity, reduced foreign exchange outflows, and improved economic resilience in the face of global trade shocks. But only if the lessons are learned — and applied — with urgency.
This article was published by Githua Kihara, an editorial consultant for FEAFFA’s Freight Logistics Magazine. For any inquiries, please contact us via email at editorial@feaffa.com or freightlogistics@feaffa.com, or reach out to Andrew Onionga directly at onionga@feaffa.com or oningaam@gmail.com / +254733780240.
