Insurance firms are set to meet this week after manufacturers raised concerns over their capacity to insure marine cargo.
The Kenya Association of Manufacturers (KAM) last week questioned local firms’ capacity to offer the product ahead of the new law that compels exporters and importers to get local marine cargo cover by January next year.
KAM said local firms lack the capital and scope to cover terrorism and piracy, provide automated marine insurance services, and ensure adherence to regional and international legal instruments on free trade.
The association added that implementation of Section 20 of the insurance law was done before configuring insurance services to the Kenya National Single Window System and Kenya Revenue Authority online portals that facilitate trade.
They also pointed out that there are no regulatory systems in place to ensure premium and price controls, or timely settlements of claims.
Insurance firms, however, insist they have the capacity to offer the product as they have been handling container cargo effectively.
According to the Association of Kenya Insurers’ (AKI) annual report, marine insurance was one of the classes that received the least claims in 2015, and was the fourth most profitable line after theft, personal accident and motor commercial covers.
Insurance firms have added that they have the option of linking up with global partners or forming horizontal consortiums to insure expensive claims.
“We are going to offer the cover that is needed, even through consortiums in the event that there is a mega product. I think the only things we do not insure currently are edible oil, petroleum and bulk grain,” an insurance insider who did not want to be named before talks are concluded told The Standard.
The source indicated that firms are currently negotiating re-insurance contracts and are likely to factor this in to buy larger covers.
Two insurance companies, Sanlam and Old Mutual, have already announced they are ready to take up the expected Sh20 billion rise in gross premiums.