Business Daily (Nairobi)
Githua Kihara
9 December 2011
Kenya’s insurance industry could reverse Sh10.4 billion marine business lost annually to international firms when clearing agents are trained in international trade issues.
Total imports last year valued at Sh947 billion would have earned Kenya’s insurance firms Sh7.1 billion had freight insurance been sourced from local firms. Exports valued at Sh409 billion in the same year would have earned the country Sh3.3 billion, said the Kenya Maritime Authority (KMA) director general, Nancy Karigithu.
The marine insurance sector is, however, set to undergo a major transformation following a recent initiative by the government to train exporters and importers on the little-understood cover that has seen traders pay billions in premium to foreign firms.
The Kenya Maritime Authority (KMA), Insurance Regulatory Authority (IRA) and the College of Insurance have already started the training that will offer certificate courses to persons handling international trade. A Marine Insurance Training curriculum was developed early this year.
“Various categories of people involved in handling import and export trade will be trained and certified to engage in the business,” said Ben Kajwang, chief executive officer of College of Insurance after the institutions trained the first bunch of agents.
The course will address among other things commercial terms frequently used in the global trade, Ms Karigithu said.
The Federation of East African Freight Forwarders Associations (FEAFFA) vice president, Gerald Kagumo said that the initiative to train agents on marine insurance would be especially handy when claims arose.
“Our people do not understand the intricacies of international insurance and other terms of global trade, we end up incurring huge losses in unpaid claims,” Mr Kagumo said, adding that it takes too long to pay the claims when goods are insured overseas.
Some importers, according to Mr Kagumo, are unaware they can insure goods locally. However, he said that although it was important for players in import business to take marine courses, making it compulsory would lock many people out of the business and was not desirable at this stage.
An underwriter with Amaco Insurance Co, which offers marine cover, Mr Calvin Nyakomita lauded the training saying that few insurers offer this product due to low demand.
Desire to retain revenue in Kenya and creation of business for the domestic insurance players was a policy informing the enactment in 1999 of section 20(2) of the Insurance Act, providing for compulsory insurance of marine cargo imports by locally registered companies.
A number of factors ranging from lack of sufficient knowledge on the importance of insuring cargo locally and Kenya Revenue Authority’s (KRA) insistence that duty be paid on CIF value has seen majority of the country’s importers insure goods abroad.
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