Importers are worried that the new directive to insure all cargo locally might turn into a trade barrier.
Kenya International Freight and Warehousing Association (KIFWA) warned that they will fight the new directive should it turn out to be a non-tariff barrier (NTB) - a form of restrictive trade where barriers to trade are set up and take a form other than a tariff.
“We hope this directive will not affect the time to clear cargo from the port,” said KIFWA representative William Ojonyo during the launch of Jubilee Insurance’s marine cargo insurance that will enable customers and intermediaries to manage their own marine insurance policy.
Mr Ojonyo said as much as clearing and forwarding agents would like to be part of this initiative, they wanted it to be “seamless”.
“We do not want to do a lot of walking. Manual will not be helpful,” said Ojonyo in an event that was also attended by the new insurance regulatory authority CEO Godfrey Kiptum.
Effective January 1, 2017, it is mandatory for all commercial imports to be insured locally under Section 20 of the Insurance Act Cap 487.
However, Jubilee Insurance CEO Patrick Tumbo assured importers that they had the capacity to roll out marine insurance. He also said that, just as many other insurance products, the cost for marine insurance will not be fixed. “All we need is a system that is easy to navigate,” said Mr Tumbo.
There have been concerns that local insurance firms have no capacity to underwrite marine insurance whose claims can run into billions of shillings.
In the months between July and September, gross premium underwritten by all the insurance providers for marine insurance was Sh2.1 billion, against a total gross premium of Sh93 billion. This represented a paltry two per cent of all the premiums.