By Etaarifa Contributor
Insurers are lobbying the Kenya Revenue Authority (KRA) to compel cargo importers to buy policies locally in their latest bid to expand their slice of marine business.
The Association of Kenya Insurers (AKI) says they have been in talks with KRA to introduce a clearance that would penalize importers who buy insurance from foreign firms. Out of imports of KES 1.6 trillion worth of goods in 2014, it is estimated that about KES 21bn is paid out annually to foreign insurers.
East Africa, according to Intergovernmental Standing Committee on Shipping (ISCOS), paid out over KES 421 billion in insurance premiums between 2008 and 2012. The money was paid by shippers, both exporters and importers in Kenya, Tanzania, Uganda and Zambia which comprise ISCOS membership and Burundi, the Democratic Republic of Congo (DRC), Malawi and Rwanda.
According to ISCOS, most shippers in the region import their cargo on cost, insurance and freight (CIF), which means that they have no control over the transportation and insurance services in the entire logistics chain. The local insurers are recommending a ‘free on board’ mode of importation which enables the shippers to buy their own insurance cover and to choose other logistics providers such as transporters.
Marine insurance in Kenya has over the past six years recorded low premium with uptake being generally low. With this realization, the Association of Kenyan Insurers has commissioned Research Solutions Africa to conduct a survey with a main objective to find out and establish reasons why marine insurance has been recording low growth and the extent of uninsured marine business in Kenya. The research also intended to establish areas with potential for growth, why they have remained untapped and recommend the best approach to capture them.
Besides insurance, ISCOS recently raised the alarm over high freight costs caused by countries failure to set up their own shipping lines or own ships. Between 2008 and 2012, Kenya, Tanzania, Uganda, Zambia, Malawi, Rwanda and Burundi paid out KES 4.2 trillion to foreign shipping companies and lines.