Marine cargo insurance premiums have jumped 19.4 per cent in the first quarter of the year as more importers ditch their long term contracts with foreign firms.
Local firms collected Sh987 million between January and March compared to Sh827 million over the same period last year. In January, Kenya began to implement a law which compels importers to buy the MCI policy from local firms.
According to the Insurance Regulatory Authority (IRA) data, most of the premiums were paid to three leading MCI cover underwriters – Britam General, Kenindia Assurance and GA Insurance – of the 37 firms so far licensed to provide the cover.
The IRA would not project how much the industry is likely to collect in the remaining months of the year citing fluctuation of imports but maintained there were prospects of growth in the sub-sector.
“The data may not at the moment give a reliable projection but of importance is that there is a cumulative growth of premiums written in 2017 compared to 2016,” said IRA acting chief executive officer Godfrey Kiptum.
The Kenya Revenue Authority (KRA) started implementing Section 20(1) of the Insurance Act that requires all insurance cover for imports should be procured locally on January 1, opening a windfall for local underwriters to more than Sh20 billion annual premiums paid to foreign firms.
When most importers order goods, they ship the cargo on a Cost Insurance and Freight (CIF) basis, leading to capital flight of billions of shillings paid to foreign firms in form of insurance premiums.
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Source: Business Daily