The stakeholders in Marine Cargo Insurance (MCI) are working closely to fix the challenges that affected the expected performance of the sector last year. They are optimistic that the industry will continue to improve in the coming years since most of the importers now know the benefits of buying insurance from the local firms.
The Association of Kenya Insurers (AKI) said that there have been significant strides made in the marine cargo business since the government issued a directive that required all imports, expect in specified instances, to be insured by Kenyan underwriters from 1st January last year. This is spelt out in Section 20 of the Insurance Act, which was not being enforced due to lack of proper coordination between various players in the sector.
“Other than business growth, there has been increased public awareness by key stakeholders especially importers on the locally available covers,” AKI Executive Director Mr. Tom Gichuhi said.
He added that though not yet perfected, the government agencies namely, Insurance Regulatory Authority (IRA), Kentrade, Kenya Revenue Authority (KRA) and marine insurers are working jointly on a portal that will eventually automate the marine insurance process, a game changer. Individual insurance companies have also created online portals for MCI to enhance accessibility by the importers and clearing agents.
Following last year’s directive, the MCI performed considerably well in 2017. The gross written premiums was Ksh2.3billon compared to Ksh1.45billion in 2016, representing an increase of 59%.
“This was a good increase albeit less than what was expected,” said Mr. Gichuhi, adding that MCI still has a lot of potential for growth given that the total national imports stood at Ksh1.58 trillion according to the Kenya National Bureau of Statistics (KNBS) Economic Survey of 2016.
Kenya has 36 insurance companies offering MCI. On financial ability, the industry currently has direct capacity of over Ksh23.3billion, which has been beefed up through consortiums with automatic facultative re-insurance to cater for very huge imports such as consignments of bulk grain and oil.
“Bulk imports are not new to the industry and even before the directive was issued, insurers were handling a substantial part of the bulk imports,” Mr Gichuhi responds to the concerns of capacity which have been raised in the past by some bulk cargo importers.
On technical capacity, there are 35 marine insurers and 30 surveyors, Mr Gichuhi said. Some of the insurers and surveyors are branches of global organizations or have affiliation such as McLaren’s and Cunningham Lindsey.
AKI has been conducting capacity building and awareness campaign by partnering with Key players that include Kenya Association of Manufactures (KAM), Kenya International Freight and Warehousing Association (KIFWA), various importer associations and Intergovernmental Standing Committee on Shipping (ISCOS) among others.
AKI has contracted a marine cargo surveillance managers- Oceanic Marine Surveyors who inspects all cargo of Ksh.250, 000 and above upon entry into the country and issue reports on possible and actual losses.
“This valuable service is not enjoyed by importers who insure overseas. Importers were made aware of the existence of this important service that costs them nothing but very useful in claims mitigation,” Mr Gichuhi added.
The Maritime and Shipping Department, the docket under which the MCI falls together with IRA are addressing policy related issues through the National Treasury and Parliament to create an enabling legal environment for the marine cargo insurance. For instance, there is need to define and harmonize the roles of KRA and IRA, Mr. Gichuhi notes.
A research study carried out by AKI in 2013 identified factors that contributes to low uptake of MCI in the country. The study blamed unawareness among importers of the availability of local marine insurance to cover their incoming cargo.
Buying marine cover from Kenyan insurers has a number of benefits to the national economy, importers and insurance industry. At national level, it prevents repatriation of billions of dollar to foreign underwriters, easing the country pressure on foreign exchange.
