NAIROBI, Kenya, Sep 21- The local insurance industry is losing close to Sh20 billion through foreign marine Insurance covers with players urging the government to intervene.
According to the Association of Kenya Insurers (AKI), a lot of cargo importers are still tied up to the idea of insuring their imports at the country of origin therefore denying the country’s insurance sector massive revenue.
The sector is now calling on the Kenya Revenue Authority (KRA) to hastily implement section 20 of the insurance Act that will compel importers to buy local insurance policies.
“Very big part of the import which comes into this country, the importers secure their insurances from their countries of origin of those goods. So, us we get the goods but the premium is not recorded in this country and that is how we lose,” AKI CEO Tom Gichuhi said.
Section 20 of the Insurance Act states: ‘No insurer, broker, agent or other person shall directly or indirectly place any Kenya business other than reinsurance business with an insurer not registered under this Act without the approval, whether individually or generally, in writing of the Commissioner.’
AKI which has been in talks with KRA and other authorities want introduction of a clearance document that would not only force importers to buy local policies but also penalise those who buy insurance from foreign firms.
“AKI is actively engaged with other key stakeholders including, IRA, KRA, Kenya International Freight and Warehousing Association (KIFWA), Intergovernmental Standing Committee on Shipping (ISCOS) and the Ministry of Transport and Infrastructure in the process of implementing this section of the Act, “ AKI Deputy Chairman Hassan Bashir said.
They were speaking on Wednesday during the release of the 2015 Insurance Industry Annual Report which saw the sectors rise by 15.3percent in 2015 to Sh49.1 billion from Sh42.6 billion in 2014.
“You know when the sector grows, that means there is increase in premiums and of course rise in the number of claims,” Gichuhi said, not forgetting the increase of fraud in the sector especially medical and motor covers.
Medical insurance claims had the highest claims at Sh15.06 billion closely followed by Motor private and motor commercial at Sh13.18 billion and Sh12.87 billion respectively.
Profit before taxation decreased by 26.5 percent to Sh11.57 billion in 2015 from Sh15.74 billion in previous year, despite recording a 10.5 percent rise in gross premiums to Sh173.79 billion.