The uptake of marine cargo insurance in Kenya remains low, despite a law introduced at the beginning of 2017 that required all imports to be insured locally, according to Shippers Council of East Africa chief executive Gilbert Langat, speaking to Kenya’s Star.
He said that the beginning of 2017 was intended to bring fresh life to the insurance industry, with figures such as KES24bn ($234m) a year in premiums being bandied around.
However, Langat said that lack of inclusion, low levels of awareness and poor implementation strategies were among reasons why the product had failed to take off in the local market. “Uptake of marine cargo insurance is still very low because of implementation issues,” he said, claiming that. “each player in the insurance industry wants a piece of the cake without working together.”
The 2017 half year report by the Kenyan Insurance Regulatory Authority showed that gross premiums collected from marine cargo increased by 21.4% (KES323m)
Langat said that more than half of imports were shipped in without insurance. “If every importer was to buy insurance, gross premiums from marine cargo insurance could be upwards of KES50bn a year,” he said.
It remains unclear who is meant to enforce the law, whether it is the Kenya Revenue Authority or the Insurance Regulatory Authority. Association of Kenya Insurers chairman Patrick Tumbo told the Star that “there was also a loophole in the new law which made the KRA reluctant to enforce. During the year, some importers had a choice not to insure and they got away with it.-KRA could not force them to insure imports locally”. He added that “the legislation needs enforcement and as long as marine insurance is not compulsory, then insisting that it be bought from a Kenyan insurer is of no value.”
If an importer has not purchased a local insurance policy, the taxman adds 1.5% of the cargo value for tax purposes. KRA recommended use of the Kentrade portal, linking the insurer and owner of the goods, as the only means of transacting marine insurance. But this would lock out agents and brokers from the sector. Bima Intermediaries Association of Kenya Chairman Washington Ndegea said that “the industry forgot to factor in brokers and agents. Where do we come in?”.