Gaps in the implementation of the Marine Insurance Act that requires the mandatory cover of imports by local insurance companies have hampered the growth of domestic marine cargo insurance in Kenya, industry sources say.
Kenyan underwriters had hoped to benefit from the marine business estimated to be worth over KES30bn ($232m) in premiums a year, following the issuance of a directive to localise underwriting of imports, effected in January 2017, reported the newspaper The Star.
Industry players attribute the situation, in which foreign insurers continue to insure imports into Kenya, to the lack of enforcement by the Kenya Revenue Authority (KRA) and the Insurance Regulatory Authority (IRA). The latest data from IRA show that insurers generated only KES4.4bn in gross premium income from marine insurance in the fourth quarter of 2023, up from KES4.1bn year on year.
According to industry players, the local insurance sector has the capacity to insure up to 60% of the country’s total imports, valued at KES1.6tn last year. Mr James Mbithi, acting CEO and principal officer at Britam General Insurance, says that domestic insurers can offer customers the same rates if not better terms than foreign insurers, “so it is about educating them and partnerships as opposed to selling”.
“The main challenge is about enforcement. KRA is not enforcing, saying it is the mandate of the Insurance Regulatory Authority, and IRA has no role to play at the port,” said Mr Alfred Musungu, an industry expert and Oceanic Marine CEO.
At the same time, there is concern over local insurers’ capacity to underwrite complex marine business.
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