NAIROBI, Kenya, Aug 13 – Jubilee Insurance and ATI have announced a Sh30 billion insurance deal, which offers Jubilee\’s customers across East Africa and later the entire COMESA region, a cover against damage caused by politically motivated violence, terrorism and sabotage.
ATI\’s groundbreaking insurance product, which ATI first rolled out in Kenya in 2008, is seen as timely by industry experts, given the increased potential for political instability both in Kenya and around the world during the current global financial crisis.
Under the facility for Political Violence, Terrorism & Sabotage protection, which was signed earlier this year, Jubilee Insurance has expanded its product line by retaining these specialist political risks, which it previously passed onto reinsurers outside the Kenyan market.
The company now offers its clients the opportunity to extend their insurance cover to include the increased risk exposure to all personal and commercial property, motor vehicles, small and medium enterprises, and large companies across East Africa within a variety of sectors including energy, banking and agribusiness. Plans are underway to cover the entire COMESA region.
The announcement was made at a joint press conference by Patrick Tumbo Nyamemba, the General Manager and Principal Officer from Jubilee Insurance, and Stewart Kinloch, ATI\’s Acting Chief Executive Officer.
"This deal with ATI has given us the flexibility to be able to meet our customers\’ needs and to be competitive in the African insurance industry. It has also given us an edge over those of our competitors, who cannot match our product offering," explained Mr Nyamemba.
The introduction of Political Violence, Terrorism & Sabotage insurance cover by ATI offers four major benefits to the insurers and their customers in the COMESA region:
" Bulk insurance capacity to customers who can now protect their property in the event of political turmoil;
" Increased financial sector capacity. Banks, for example, have been reluctant to lend beyond five years due to the election cycle but this insurance cover allows them to lend for longer periods and on better terms, which benefits their clients;
" Access to a practical means of expanding their business, for African insurers
" Support for foreign capital inflows into Africa, where in 2009 it is expected that the continent will, according to the World Bank, experience a decline of some US$ 50 billion in foreign income.
"When we step into the picture" notes ATI\’s Acting Chief Executive Officer, Stewart Kinloch, "we are offering peace of mind to both local and foreign investors. Essentially, we are saying \’you don\’t need to worry, we assume political risks in Africa so that you can focus on building your investment\’."
Political Violence, Terrorism & Sabotage insurance cover was first introduced in Kenya, in September 2008, after a post-election assessment revealed a gap in the market, where damage worth billions of shillings could not be covered with existing insurance and reinsurance products.
The insurance industry\’s inability to underwrite this type of risk locally, led ATI to provide reinsurance to the market with the backing of local and international partners such as Africa Re, the East Africa Reinsurance Company (Zep Re) and Lloyd\’s of London. This partnership enabled ATI to create a unique product that local Kenyan insurers can access and then pass on to their customers alongside their existing policies such as motor vehicle and property damage.
"The reality is that companies must carry on even in the face of political turmoil because they are the major engines of growth in all countries. Our clients, particularly those operating in high risk places are telling us that without this cover, it would be difficult for them to operate," Mr Kinloch.
The demand for ATI\’s products has shown a positive trend in light of the global financial crisis. The Agency\’s 2008 financial results reflect the upward demand within the region as it posted an 80 percent increase in its gross written premium and a 217 percent growth in its net underwriting profit. ATI is also expanding outwards to include into its membership West African countries such as Ghana, and OECD partner institutions like SACE of Italy.
ATI is currently in negotiations with other African insurers, who have expressed interest in its Political Violence, Terrorism & Sabotage insurance cover. The Agency hopes to launch this product across Africa within the next year as it continues seeking opportunities to fulfil its mandate to transform Africa into a prime trade and investment destination.
The African Trade Insurance Agency (ATI) is an African owned International Financial Institution. Founded in 2001 by African States, ATI provides Political Risk Insurance Products to support African investments and trade. ATI has supported US$1.2 billion in trade and investments across Africa including telecommunications, manufacturing, agribusiness, education, export, services, hotels, mining and residential housing.