Kenyan insurance firms ready for big gains under new law

Insurance companies in Kenya are positioning themselves to reap big from a new law that makes it compulsory for all imports to be insured locally.

The law, which came into effect on Jan. 1, requires all imports to be covered locally, making it easy for importers to make claims, a departure from the past then they had to lodge claims with foreign underwriters.

In anticipation for the growth in business, insurance firms have in the last few weeks been working on systems to comply with the new rule.

The law, according to the Association of Kenya Insurers (AKI), is a boost the industry needed to grow the business.

Over the years, marine insurance has been recording low premium as uptake was generally low due to legal barriers and lack of awareness.

According to AKI, insurance premiums are expected to grow by about 198 million U.S. dollars with insurers passing on the business to reinsurance firms to help absorb the risk.

At 198 million dollars, marine insurance will contribute over 10 percent to the total premiums of 1.7 billion dollars handled by Kenyan firms.

As at September last year, premiums collected under marine insurance were recorded at 20 million dollars with reinsurers receiving 5.5 million dollars.

"Currently, about 90 percent of import insurance business is handled by foreign firms, which take the profit back to their countries. Kenyan insurance firms have long been spectators in the sector but this law gives them power to take the bull by the horns. It is certainly a big boost," said Henry Wandera, an economics lecturer in Nairobi. Endit