Regional underwriter Kenindia Assurance has called for stiff penalties for importers ignoring local marine insurance products in favour of foreign covers for their consignments.
The insurer says this has denied companies much-needed business and the Treasury revenue. The firm pushed for firms using local marine insurance cover to enjoy more tax incentives than those using foreign covers.
“Kenya Revenue Authority has been reluctant to enforce penalties for importers using foreign covers at a rate of 1.5 percent that could churn new revenue for the government,” said General Insurance assistant manager Joyce Mathenge.
Treasury Secretary Henry Rotich had in 2017 directed all importers to use local marine insurance for imported goods, saying this could boost premiums as well as the capacity of local insurers to handle big-ticket jobs.
Ms Mathenge said the mandatory use of local marine insurance had helped grow their marine cover uptake by 27 percent in the past two years.
She said Kenya should consider lowering duty on marine insurance premiums to enable local marine products to compete on an equal footing with foreign underwriters.
“Perceived high premium rates due to high stamp duty on imports by sea contributes about 30 percent of total premium costs compared to the lowly priced international marine insurance rates,” she said.
Ms Mathenge said Kenya should also review trade agreements that allow suppliers’ a monopoly in determining the marine cover that an importer takes under the Cost, Insurance Freight model.