Westgate Mall owners paid Sh5 billion for 2013 terror damage

Owners of Westgate, the Nairobi mall that suffered a terrorist attack about five years ago, and their tenants were paid Sh5 billion ($50 million) insurance compensation, making it one of the largest underwriting claims ever in Kenya.

African Trade Insurance Agency (ATI) said nearly 86 per cent of the money or Sh4.3 billion was paid to Sony Holdings Limited, the owners of the building that was heavily damaged in the September 2013 attack.

The remaining Sh700 million went to compensating small businesses that were located at the mall and individuals who suffered material loss as a result of being in the building at the time of the attack.

“Kenya has so far been very good to us, the only major claim we paid was the Westgate Mall where we spent a big chunk of close to $50 million,” said ATI chief executive George Otieno yesterday.

Suspected Al-Shabaab terrorists attacked the shopping mall on September 21, 2013, killing more than 70 people, and injuring hundreds of others.

Millions of shillings worth of property was also destroyed.

The shopping mall was insured by Lloyd’s of London, ATI and the Kenindia Insurance.

Westgate Mall hosted more than 50 businesses, including Nakumatt Supermarkets, the anchor tenant, several banks including Barclays #ticker:BBK, DTB #ticker:DTK and CFC #ticker:CFC, restaurants, and clothes and jewellery shops.

ATI paid the massive amount of money to different insurance companies for onward payment to their clients.

Mr Otieno said about 30 small businesses and 15 vehicle owners benefited from the payout.

“The few number of motorists compensated was due to the fact that most had not extended their cover to terrorism,” said ATI’s head of claims and recoveries, Lucy Machel Ondiek.

That means all vehicles that were insured against theft or fire but not terrorism were not paid for even if they were burnt at the ill-fated shopping mall.

Terrorism cover

Underwriters had warned that most of the victims, especially car owners, risked bearing the loss for not having been insured against terrorism acts.

Ms Ondiek said Westgate Mall owners have since renewed their cover but declined to disclose the amount.

In late 2013, a report by the sector regulator, the Insurance Regulatory Authority (IRA), indicated that Westgate Mall was insured for Sh6.7 billion, covering property damage and business interruption.

However, claims from individual tenants, who had lost stock and shoppers’ personal property including motor vehicles, were expected to increase the total payout.

Knight Frank, an upmarket property valuer, had also said that the building could not be sold for less than Sh6.9 billion. The terror attack has since led to increased uptake of insurance products that cover terrorism.

Lately, a number of underwriters have reported an increase in the sale of terrorism cover and premiums.

The political violence, terrorism and sabotage insurance cover protects businesses and individuals against financial losses directly resulting from politically motivated violence or terrorism and sabotage events.

Underwriters can insure an individual or a business directly on a stand-alone basis or through an insurer under a reinsurance contract.

In most cases risk covered includes damage to property, loss of income or revenues due to business interruption, and third party liability.

Despite the heated political environment in the country in 2017, ATI said it did not receive any claim on political violence, unlike in 2008 when the insurer had to pay close to Sh500 million ($5 million).

“We have spent close to $13 billion (Sh1.3 trillion) in Kenya to cover trade and investments risks of companies since 2001,” said Mr Otieno.

Last year, the agency had reported fewer enquiries for political risk cover than in the previous elections, as a majority of investors felt that the election was much safer than in 2007.

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