Data by the Association of Kenya Insurers (AKI) shows that gross written premiums dropped by 4.64 percent from Sh3.66 billion in 2018.
The drop recorded last year is a further drift from the peak of Sh3.75 billion in 2017 when the government amended the Insurance Act Cap 487 making it mandatory for marine cargo insurance on Kenyan imports to be taken out with Kenyan insurers.
AKI says the enforcement of the law has been week, denying local firms revenue at a time government data showed that imports rose by 2.4 percent to Sh1.81 trillion.
Marine insurance premiums dropped to a three-year low of Sh3.49 billion in 2019 on weak implementation of a law that requires cargo to be underwritten by local insurers.
Data by the Association of Kenya Insurers (AKI) shows that gross written premiums dropped by 4.64 percent from Sh3.66 billion in 2018.
The drop recorded last year is a further drift from the peak of Sh3.75 billion in 2017 when the government amended the Insurance Act Cap 487 making it mandatory for marine cargo insurance on Kenyan imports to be taken out with Kenyan insurers.
AKI says the enforcement of the law has been week, denying local firms revenue at a time government data showed that imports rose by 2.4 percent to Sh1.81 trillion.
“The decline since 2017 can be attributed to non-enforcement of the legal requirement to have marine cargo insured locally,” says AKI.
Insurers had expected the change in law to help them grow annual marine insurance premiums to about Sh20 billion, meaning that the current collections are less than a fifth of the potential premiums.
The Customs department of the Kenya Revenue Authority(KRA) had been instructed not to clear goods until they are verified along with the marine insurance proofs from a Kenyan insurer.
Marine cargo insurance is a transit risk policy which provides cover for loss between any two points either by sea, air, rail or road.
The cover had the highest decline in growth compared to other 11 major classes of non-life insurances in 2019.
The drop in premiums saw the underwriting profit—the difference between premiums collected and claims paid out and expenses incurred— drop by 7.2 percent to Sh407.59 million.
In 2016, insurers had said 90 per cent of the Sh1.43 trillion imports were insured outside Kenya. Given the high import volumes into the country, the premium remains much lower than what the industry had anticipated.
AKI has in previous reports stated that there was an ongoing engagement between underwriters and relevant government agencies to digitise the purchase process.
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