Firm unveils stand-alone political cover

By John Oyuke

A new insurance product has been launched in the local market to cover investments against political risks.

The terrorism, sabotage and political violence cover developed by Cannon Assurance, comes on the backdrop of increased threat of terrorism and political violence.

Managing Director, Maina Mukoma, said the stand-alone political cover dubbed ‘Linda Mali or Amani Plus’, aims at shielding investors from uncertainties that characterise many businesses in developing markets and damages arising from violence related to political activity.

“Most insurance companies have not been able to provide political insurance as a ‘stand-alone’ cover – often requiring people to take other covers on accommodation,” Mukoma said during the launch of the new product in Nairobi Thursday.

Threat of violence

There has been a growing demand for insurances cover against political violence, especially immediately following the post-election violence experienced in 2008.

Other companies offering insurance cover against political unrest are UAP Insurance, Jubilee Insurance and APA Insurance Company.

UAP was the first to roll out the product in 2008. Jubilee followed in 2009 – signing a US$384.6 million deal with Africa Trade Insurance Agency (ATI) to provide cover to businesses in Kenya, Uganda, Tanzania, Mauritius, Burundi and Rwanda.

APA Insurance entered into another US$434 million reinsurance deal with ATI in 2010 to give small and medium enterprises in Kenya and Uganda cover against political violence, terrorism and sabotage.

The cover is provided as an added benefit to its policyholders in the two countries.

Cannon’s new cover has been launched with the backing of two reinsurance firms, Lloyds of London and Kenya Reinsurance Corporation.

Slows economy

The product, projected to have 2.5 per cent contribution to the firm’s business turnover, would provide cover for buildings, motor vehicles, goods in transit, stocks, construction works, business interruption, machinery and equipment.

Mukoma said increased threat terrorism and political violence in the country hurts business as investors hold back their capital.

“The threats have not been empty and we have seen businesses and livelihoods being affected due senseless destructions,” he said pointing at the rising threats of Al Shaabab terror group.

“As leaders in the underwriting business, it is imperative for us to engage with our customers on the risk posed by situation we find ourselves in as a nation.”

He said while increased government spending on infrastructure will boost business, more should be done to secure investments from any potential threats of destruction if the economy should grow.

Besides the new product, Cannon Assurance will also be seeking increase its penetration and reach in the country.

“This year, we have plans to increase our branch network from the current five by opening two more branches in new towns,” Mukoma said.