A team will be formed to help Kenyan shippers buy local marine insurance after the implementation from January 1st 2017 of a law that will require importers and exporters to buy insurance locally, prohibiting the placement of marine insurance in the hands of foreigners except in exceptional circumstances.
State Department of Shipping and Maritime affairs Principal Secretary Nancy Karigithu said that the committee would include insurers, state agencies and shippers. She insisted that the government would enforce the law as soon as it came into effect.
Speaking at a forum in Nairobi, she said that “the taskforce will establish why many importers and exporters prefer to procure insurance covers overseas. It will also develop a joint action plan of all concerned parties for awareness campaigns on appropriate use of international commercial trade terms across the country”.
The forum was organised by the Shippers Council of Eastern Africa in collaboration with insurer Britam Holdings to educate importers on the upcoming implementation of Section 20 of the Insurance Act Cap 487 and the readiness of the local underwriters to cover imports. Britam said that it had launched a website for potential customers.
The 36 locally based insurers have been positioning themselves to take advantage of an opportunity that is expected to boost their premiums by about KES17bn ($166m). About 90% of cargo import insurance is currently handled by foreign firms, with importers paying the premiums as part of a cost, insurance and freight (CIF) package to exporters who handle the underwriting.
Shippers Council CEO Gilbert Langat said the local industry must demonstrate both the financial and technical capacity to undertake marine insurance locally. “Another major concern for shippers is the price competitiveness of the products that are locally available,” he said, adding that “claims settlement and service level agreement must be clearly stipulated while procuring local marine insurance. The test for insurers will be in the time it takes to settle claims and ensuring that the importer incurs very minimal cost in the process.”
Britam Holdings Group managing director Benson Wairegi insisted that the local industry had the capacity to competitively offer marine cargo insurance for the importers.
Kenya Revenue Authority (KRA) deputy commissioner of Customs Charlie Onduso said the that insurers pay a duty equivalent to 0.05% of the insured consignment’s value. Kenya imports goods worth KES1.57trn a year, the majority of it currently insured with offshore providers.