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Friendly laws enhance insurance penetration

NAIROBI, Kenya, Mar 1- Company legislations as well as the implementation of the new constitution have helped modernise and increase exposure for insurance companies.

Regional Assistant Vice President for Chartis, Pierre Fraigneau said the new regulations have helped increase the penetration in the insurance sector from a mere 0.3 percent to 3 percent last year.

“When you make a decision as a director or officer of a company, it will have an impact on the business and your stakeholders. There is a large market that has been opened up due to legislation that has been passed in the country such as the Companies Bill which is currently before Parliament, as well as the implementation of the new constitution,” Fraigneau said.

Fraigneau spoke while launching an insurance cover for directors and senior management teams in unlisted companies where he added the company will target 150,000 private companies who do not trade on the Nairobi Stock Exchange.

“The same duties and obligations apply to all directors and officers, regardless of the size of the company. Business leaders of companies, including small and medium-size enterprises, can be adequately shielded from potential threats so they can operate from a safe environment,” he added.

Bernard Dulo said the Executive Guard Directors and Officers (EGDO) policy is an enhanced cover that will address wider risks that have been excluded by insurance companies.

“The Bill of Rights put very heavy demands on the companies and specifically directors. Chartis has taken that into consideration while coming up with the blueprint for this product. Choose the limit of liability that you are comfortable with, and then choose the cover for your company,” Dulo said.

Chartis said claims against directors and officers are becoming more frequent in all types of companies, regardless of their size or market capitalization.

He further added, “There are many management challenges that call for decisions to be taken at lightning speed so as to remain in business. Anyone serving on the board of a company, charity, an association as well as a professional body may be sued by third parties affected by their decisions.”

The insurance firm already provided this cover to directors and officers of large corporations trading at the NSE.

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This policy has now been diversified to target unlisted companies and institutions which are further exposed since they lack the resources to insulate themselves against management-related risks that may lead to closure under the weight of suit burdens.

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