Boon as KRA, IRA enforce local marine insurance rule
The changes set in on January 1, 2017, but compliance has been low given that KRA has been clearing imports whether their marine cover is from a local or foreign company.
Local insurers are set for increased business after the Kenya Revenue Authority (KRA) said it would only clear imported cargo covered by indigenous marine insurance.
KRA, in a joint notice with the Insurance Regulatory Authority (IRA), has informed importers that this rule will be enforced starting on February 14, 2025. This will severely affect foreign insurers’ involvement in marine insurance for goods entering Kenya.
Marine insurance policy protects goods from the risk of loss, damage, and theft during transit by sea, land, and air from the port of origin.
The cover protects importers from loss, giving financiers the comfort to lend to such businesses.
The teaming up of KRA with IRA promises to boost compliance with the changes that were made to the Marine Insurance Act CAP 390 and Insurance Act, outlawing sourcing of marine cargo insurance policies from insurers not locally licensed.
The changes set in on January 1, 2017, but compliance has been low given that KRA has been clearing imports whether their marine cover is from a local or foreign company.
“To ensure full compliance with the indicated legal provisions, the public is hereby notified that effective 14th February 2025, all importers shall be required to digitally procure marine cargo insurance cover for their imports from locally licensed insurance companies in accordance with the above statutes, prior to obtaining custom clearance,” said IRA and KRA in a notice.
IRA data shows marine and transit insurance has been growing, with premiums hitting Sh4.41 billion in 2023, a 5.2 percent growth from Sh4.19 billion in the preceding year and a 63.3 percent rise when compared with Sh2.7 billion in 2016 just before the directive set in.
However, Kenya’s value of principal imports hit Sh2.61 trillion in 2023, a growth of 4.9 percent from Sh2.49 trillion a year earlier and a 44.5 percent rise from Sh1.81 trillion five years earlier, convincing insurers that they have barely scratched the surface when it comes to marine cover.
Importers will be go for digital marine cargo insurance certificate through clearing agents and importers' mobile apps, dedicated portals, or underwriters’ platforms connected to the IRA electronic platform.
The processed digital marine certificate from the IRA platform will be electronically submitted to the KRA’s Integrated Customs Management Systems (ICMS), which supports import and export processes.
Five insurers accounted for 55.4 percent or Sh2.44 billion of the marine and transit insurance premiums at the end of 2023, with GA Insurance and Britam General taking the top two slots with a market share of 14.49 percent and 13.89 percent respectively.
Geminia Insurance, Mayfair Insurance, and ICEA Lion General followed with market shares of 11.47 percent, 8.88 percent, and 6.63 percent respectively, leaving 27 other insurers in the marine business with 44.6 percent.
Local insurers have been complaining that many imports have been coming in with cover from the market of origin. Some local underwriters have also contributed to the problem by opting to front additional risk to foreign players instead of co-insuring with their counterparts in the country.
