NAIROBI, Kenya, Feb 13 – A section of insurance industry players reckon that they need to take risk management more seriously than they have in the past as a way of reducing the impact of losses.
Real Insurance Chief Executive Officer Joseph Kiuna told Capital Business that based on the recent report that only a handful of buildings in Nairobi’s Central Business District (CBD) are fire compliant, the underwriters need to devise effective ways of reducing the impact of such a loss.
“The companies need to make sure that they survey the risk on buildings and other premises by sending their assessors to make sure that there is compliance, before the loss occurs,” he said.
He was reacting to a report that only 30 percent of office premises in the CBD are prepared for disasters which increases the risk on the insurance companies.
The standard procedure is to send in an internal or external fire expert who will do the survey and write report on the level of safety compliance. Mr Kiuna however admitted that proper procedure has not always been followed while others have been skipping it all together.
He explained that the companies would need to invest in resources to get fire experts to ensure that whatever building they insure and proposals such as the need to carry out frequent fire drills and testing of equipment regularly are implemented.
Mr Kiuna opined that some of the proposals that are normally given to property owners should be enforced as a condition of the (fire) policy which stipulates that unless those recommendations are implemented within a certain time frame, then the policy would not exist.
“This means that if your building is not fire compliant and a claim occurs, then you are on your own. I think an underwriter is likely to get a better response from such as proposal as opposed to reviewing the premium upwards,” he added.
Mr Kiuna dismissed the option of increasing the premiums in the general cover saying it would not be an ideal or lasting solution for all parties involved.
“You can collect an additional Sh10,000 or Sh20,000 but the buildings will still go down and you will still pay millions (of shillings in claims),” he argued.
He however could not rule out the possibility of the premiums going up in the near future arguing that their re-insurers were likely to adjust the rates irrespective of what risk management they would have undertaken.
“The statistics by the Nairobi Central Business District Association are worrying and when we meet out re-insurers at the end of the year, they could insist that these proposals become part of the policy,” he predicted.
He also forecast that the production of a certificate of compliance from the Nairobi City Council every year could also be a requirement but expressed doubts that this would be a genuine way of determining the conformity owing to the level of corruption at the council.
Mr Kiuna also said property owners, especially in buildings which are frequented by members of public would be well advised to take a liability policy which covers third party claims.
He explained that such a policy – which includes legal fees and other expenses – covers the members of the public who visit the premises in case of an accident.
“If an incident occurred and a person felt that the building did not have its exits marked properly or a proper escape route was not properly designed, he might decide to file a legal suit for negligence. A liability policy would protect you in such a case,” he emphasised adding that this kind of cover was affordable.
Mr Kiuna however decried the low uptake of these two insurance policies and blamed it on ignorance on the part of the public.