NAIROBI, Kenya, Jan 19 – Players in the insurance sector say there is a growing demand for political violence, terrorism and sabotage cover thus the need for firms to provide them.
African Trade Insurance (ATI) Acting CEO Stewart Kinloch called upon insurance firms to protect their clients by coming up with innovative products that guard against potential losses emanating from such events.
“As the financial crisis bites deeper into pockets, there is a trickle-down effect that has impacts on fuel, food shortages and it doesn’t take a lot to turn fuel shortages and food shortages into political unrest and malicious damage,” he said.
Pointing to the events that led to the 2007 general elections, he pointed out that the need for this cover could not be overemphasized and underscored the need for property owners to take some precautionary measures.
Speaking after ATI signed a Sh31 billion political violence, terrorism and sabotage reinsurance agreement with APA Insurance, Mr Kinloch said the demand for such covers in the East African region was growing, a move which called for such insurance.
APA CEO Ashok Shah said they had moved to fill this gap in the market and even make it accessible to policy holders with modest incomes.
“The insurance industry in Kenya has been accused of shying away from non-traditional insurance leading to great suffering by the public in terms of loss of property by calamities,” Mr Shah said.
Premiums for policyholders with lower than Sh2 million would not be increased, he said.
“By doing this, APA is realy standing up for its customer base, the man on the street,” he added.
Under the reinsurance agreement, ATI will act as APA’s re-insurer by absorbing over 90 percent of the risk underwritten on any resulting claims. The arrangement increases APA’s capacity to insure an individual property or that of an SME of up to a maximum of Sh265 million. Higher value properties will be covered under a separate agreement
The APA Political Violence reinsurance cover is the third such cover provided by ATI to Kenyan-based insurer. ATI is already in partnership with Jubilee and UAP insurance agencies offering similar covers
ATI expects to announce additional political violence reinsurance deals in 2010 with insurance companies in Kenya and Uganda as well as other markets that have experienced civil unrest in recent months.