The Insurance Regulatory Authority (IRA), through its insurance commissioners, has clarified to the Shippers Council of East Africa (SCEA) that the directive requiring mandatory local Marine Cargo Insurance (MCI), issued on February 14 and later postponed to July 1 this year, remains in force and has not been suspended.
However, importers have been permitted to continue using the Cost, Insurance, and Freight (CIF) model for now, as the IRA’s ICMS platform and supporting Kenya Revenue Authority (KRA) systems are not yet fully operational but are expected to be finalized in the coming days. The IRA also assured the SCEA that concerns raised by stakeholders will be addressed on a case-by-case basis.
Despite this assurance, various stakeholders have expressed significant reservations regarding the mandatory requirement for local marine cargo insurance. Among the key concerns is the lack of clear exemption guidelines. Importers and industry players have demanded greater transparency on how exemptions will be applied, particularly for goods insured under CIF, contract manufacturing arrangements, high-value shipments, government-to-government imports, humanitarian aid, and supplier-retained interest transactions.
Another critical issue raised is the absence of detailed implementation procedures. Stakeholders argue that there is confusion about how the directive integrates with the Kenya Revenue Authority’s Integrated Customs Management System (iCMS) and the KenTrade Single Window System, especially in scenarios involving cancelled Import Declaration Forms (IDFs), which currently lack clear handling procedures.
From a global trade perspective, stakeholders warn that the mandatory local insurance requirement conflicts with established International Commercial Terms (Incoterms) and global trade practices. This, they argue, creates legal and financial uncertainties in supplier-importer contracts, potentially disrupting established supply chains.
Concerns over the potential increase in trade costs have also been voiced. Stakeholders contend that forcing importers to rely solely on local insurers could raise the overall cost of doing business in Kenya, undermine the country’s competitiveness, and hinder its industrialization by limiting importers’ flexibility to source insurance competitively from international markets.
The process itself has also come under scrutiny, with accusations of inadequate stakeholder engagement. Industry players argue that the implementation of the directive has lacked broad consultation and effective awareness campaigns and should have been phased in or piloted to avoid operational disruptions.
Digital and infrastructure readiness is another point of contention. Many believe Kenya’s current digital infrastructure is ill-prepared to support the seamless implementation of the MCI requirement, risking delays and inefficiencies in cargo clearance processes.
Additionally, fears of market monopolization have emerged, with stakeholders cautioning that the directive could pave the way for a few dominant underwriters to control the marine cargo insurance sector, stifling competition and reducing importers’ freedom of choice.
Legal concerns also persist, particularly around potential conflicts between the directive and the East African Community Customs Management Act (EACCMA), especially regarding how insurance costs are valued within customs procedures.
Further, key industry bodies such as the Association of Insurance Brokers of Kenya (AIBK) and many importers feel sidelined from the decision-making process, raising concerns over the inclusivity of the policy formulation.
Finally, stakeholders highlight critical implementation gaps, including a lack of guidance on handling shipments that arrive without IDFs and uncertainty over whether local insurers have the capacity or competitiveness to adequately handle high-value or globally insured shipments. They have called for assurances that local insurers can offer rates and coverage terms comparable to international providers, warning against forcing businesses into reliance on local options that may be unprepared or overpriced.
The process itself has also come under scrutiny, with accusations of inadequate stakeholder engagement. Industry players argue that the implementation of the directive has lacked broad consultation and effective awareness campaigns and should have been phased in or piloted to avoid operational disruptions.
Digital and infrastructure readiness is another point of contention. Many believe Kenya’s current digital infrastructure is ill-prepared to support the seamless implementation of the MCI requirement, risking delays and inefficiencies in cargo clearance processes.
Additionally, fears of market monopolization have emerged, with stakeholders cautioning that the directive could pave the way for a few dominant underwriters to control the marine cargo insurance sector, stifling competition and reducing importers’ freedom of choice.
Legal concerns also persist, particularly around potential conflicts between the directive and the East African Community Customs Management Act (EACCMA), especially regarding how insurance costs are valued within customs procedures.
Further, key industry bodies such as the Association of Insurance Brokers of Kenya (AIBK) and many importers feel sidelined from the decision-making process, raising concerns over the inclusivity of the policy formulation.
Finally, stakeholders highlight critical implementation gaps, including a lack of guidance on handling shipments that arrive without IDFs, and uncertainty over whether local insurers have the capacity or competitiveness to adequately handle high-value or globally insured shipments. They have called for assurances that local insurers can offer rates and coverage terms comparable to international providers, warning against forcing businesses into reliance on local options that may be unprepared or overpriced.
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 / +254733780240.
