Regulators asked to tighten Marine Insurance Underwriting Rule.

Agencies involved in clearing cargo have been asked to be more vigilant in regulating the marine underwriting in Kenya to maximize gains. Mr. Ken Mwige, the Secretary-General of the Intergovernmental Standing Committee on Shipping (ISCOS) asked the agencies to create a common platform through which all stakeholders can interact and track the trends.

Since the government agencies started to implement last year directive requiring all import to be insured locally, the industry has not yet received the envisaged results. According to the Association of Kenya Insurance (AKI), marine insurance premiums collected hit Sh1.14 billion compared to Sh694.9 million in a similar period last year.

Although this was a 64 percent growth, the industry was expected to reap big considering that the country has been ceding close to Sh 20 billion every year to foreign underwriters going by the volumes of our imports. AKI expected the premiums to hit at least Sh5 billion by half year, based on the country’s import figures.

Out of the 35 insurance companies that wrote the risk in the first six months, only two recorded premiums of Sh100 million and above.

It is the need to retain the huge income that led the Treasury Cabinet Secretary Mr. Henry Rotich, in last year’s budget speech, to direct the industry players to enforce Section 20 of the Insurance Act. The premium in many jurisdictions ranges between 0.5 to 0.7 percent.

Kenya Revenue Authority (KRA) was directed by the Treasury Cabinet Secretary (CS) Mr. Henry Rotich during last year’s budget speech to enforce the often ignored Section 20 (1) of the Insurance Act that requires compulsory procurement of marine insurance from local firms.

Following the directive, a multi-agencies committee of six formed a technical team to develop a framework and modalities for stemming the expatriation of millions of dollars that left the country every year in the form of Marine Cargo Insurance (MCI) premiums. The team settled on KenTrade as the most strategically positioned body given that the Kenya TradeNet System was already operational.

The insurance cost for non-compliance is calculated at 1.5 percent of the total cost of goods and freight, which compares poorly with the rate of MCI from local underwriters that is less than 0.7 percent of the same.

KRA is already working with KenTrade to develop an enhanced System integration which will be accommodative to the new system of Integrated Customs Management System that intends to replace KRA’s 10 years old Simba system.