Close to 8,000 agents and brokers are lobbying insurers to lock out importers from booking policies from their online portals as industry earnings drop amid claims of undercutting.
Through their national lobby, the Bima Intermediaries Association of Kenya (BIAK), the agents said allowing traders direct access to portals for marine cargo insurance (MCI) has rendered their businesses irrelevant in the industry value chain.
From January, all the insurance firms that provide MCI have launched online portals that enable traders to log in and buy their products directly.
“We are losing a lot of commissions,” said BIAK chairman Washington Ndegea. “All we do these days is to educate customers who then go behind our backs to buy directly from service providers once they understand the products.”
“The question of who can log into the portals should be sorted out urgently,” Mr Ndegea told the first National Conference on MCI held in Nairobi last week.
From January 2017, Kenya has been implementing Section 20 (1) of the Insurance Act, which makes it compulsory for importers to procure marine policy locally.
The firms had estimated that their revenue would grow by Sh500 million every month from the date of implementation of the law until the industry gets to its potential of Sh20 billion per year.
Data compiled by the Insurance Regulatory Authority (IRA) shows that new firms seeking opportunities have entered the segment, raising the number of MCI underwriters to 37 by end of the first quarter.
The new players are said to have engaged in vicious price wars amid claims of undercutting in the pricing of products.
It is believed that partly due to the rock bottom MCI prices, the industry has recorded just a marginal gross premium growth over last year levels.
The IRA data shows that local firms collected gross premiums totalling Sh987 million between January and March this year compared to Sh827 million over the same period last year.
Industry players also asked for harmonised MCI rates to end undercutting.
“At the end of the day, the net result of a well-functioning insurance market shall be better pricing of risk, greater efficiency in overall allocation of capital and mix of economic activities in the maritime sector,” said maritime and shipping affairs PS Nancy Karigithu.