During last year’s budget reading session, Treasury Cabinet Secretary, Henry Rotich announced that beginning January 2017, KRA will require importers to underwrite all marine insurance business only with locally registered insurers, in compliance with Section 20 CAP 287 of the amended Insurance Act.
The Act states that no insurer, broker agent or other person shall directly place any Kenyan business other than re-insurance business with an insurer not registered in Kenya without the prior approval, whether individually or generally in writing of the commissioner.
Marine Insurance typically covers cargo, hull as well as other incidental losses/liability when goods are in transit, from one country to another and applies to goods transported by sea and air and also extends to road/rail to the final destination.
The law requires every importer to insure their cargo with the local insurers as the customs department KRA will not clear any goods if not covered by a local insurer. According to a World Bank report on Kenya’s economic update, import of goods and services is expected to soar by 7.6 percent this year. It presents a massive opportunity therefore for local underwriters to grow the marine insurance business class that hitherto the ruling was almost non-existent.
Similarly, at a time when the insurance industry is grappling to innovate and permeate into new markets, this presents a grand opportunity for underwriters to leverage n an opened business line that is expected to push the marine insurance industry’s worth up to Ksh 20 billion.
Alternatively, the local underwriting fraternity will have to prove they are well capacitated to undertake the insurance business, with a key concern for the importers questioning the ability to handle large shipments without compromising on the quality. However, in light of this turn of events, Insurance sector though leaders weighed in on the discussion on how this impacts the sector.