Political risk insurance demand low ahead of pollMonday June 13 2022
Demand for insurance against political violence remains muted in Kenya ahead of the General Election in August, according to underwriters.
This has been attributed to a mix of businesses holding the special covers continuously besides growing confidence in the country’s ability to handle political transitions without much economic disruption.
Insurers are nonetheless raising premiums for political risk covers in anticipation of higher uptake closer to the polls date.
Kenya’s General Elections have often been characterised by unrest and violence, most notable in 2007 and 2017, costing businesses billions in lost earnings and damages.
Harold Mbati, executive director at Reinsurance Solutions Kenya Ltd, said the slow uptake is indicative of the mainstreaming of political insurance, where businesses are now seeing it as normal to hold the cover continuously. The firm is the local office of Mauritius-based pan-African reinsurance broker Reinsurance Solutions International.
Potential buyers of the cover are also seen to be waiting for a period closer to the polls after gauging the level of risk.
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“Initially it was a specialist insurance but over time it has become normal, especially in Kenya. Uptake is there but we’re not seeing influx on the basis that this is a political year…when we get towards the election I would expect it to increase especially in certain parts of the country,” said Mr Mbati.
“The pricing has gone up already, but insurance buyers are gambling between ensuring they have enough protection, and staying within their budget.”
Political cover, much like that against terrorism, is mainly taken up by businesses that would be in harm’s way in case of political violence, whether through physical damage to premises and looting, or loss of business due to precautionary closures.
The lack of clamour for the cover this time round could also be indicative of businesses assessing lower risk levels associated with the upcoming polls compared to previous elections.
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“You observe the exposure first and see if you are at risk, and also the political environment at the time will determine whether you need to buy the cover,” he said.
In May, the cohesion agency listed Nairobi, Nakuru, Kericho, Kisumu, Uasin Gishu and Mombasa counties as the likeliest to experience poll unrest, ideally giving authorities and civil groups time to roll out measures to forestall skirmishes.
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