Local firms angle for huge deals in mining, oil and gas

Britam Group Managing Director Benson Wairegi (centre) says insurance firms have started reacting to the discovery of minerals in the region.  [PHOTO: FILE]

By NICHOLAS WAITATHU

Insurance and security companies are positioning themselves to exploit the untapped potential in guaranteeing safety to mining organisations.  This is as discoveries of mineral resources pick up, which require insurance cover and specialised security services.

Britam Insurance regional Director Stephen Wandera says that the market at the moment is characterised by high demand for insurance by companies currently undertaking mining prospects.

“Insurance companies are setting their eyes on development of nascent oil and gas to grow their profits in addition to expanding their markets as competition intensifies, he said.

Huge prospects

Wandera noted that the discovery of the minerals by different companies both local and international has increased exposure to risks. The risks include fire, landslides, loss of gross on transit, among others.

A section of players in the industry however argue that there is need for the insurance companies to enhance their financial base and train personnel.  CIC Insurance Managing Director Nelson Kuria said the mining industry requires huge capital and insurance companies equally need to enhance capitalisation as well as training the personnel.  In the last two years insurance companies have been training their personnel on oil and gas to enhance their hold on the merging business fronts  in minerals industry.

 

Britam Group Managing Director Benson Wairegi said his firm’s focus will include nascent oil and gas sector, which though risky, has potential to deliver high returns.

“Oil and gas is a very lucrative sector, as is mining, and we are confident that ventures into the industry will yield handsome returns for our business,” Wairegi said.

 “Insurance companies have started reacting to the discovery of various minerals in the country and region,”  Wandera noted.

“For the last two years the companies have been training their personnel to understand the new area well and more so to assist in product development.”

 In an interview last week,  Wandera said being an emerging industry in the economy, mining will require insurance cover for personnel, machinery, stock both in containers and on transit, fire, and entire business interruption. “There will be big opportunities for insurance companies to ensure smooth performance of the financial sector.  We expect to earn huge premiums in these deals once we start rolling out the products to offer indemnity cover,” he added. 

Mineral resources

For the last two years the country has witnessed discovery of minerals in various regions, for example, coal in Kitui County, oil and gas in Turkana and Malindi counties, and gold in Narok County.

 Kuria explained that extending insurance services to the mineral sector is a huge business not only to insurance companies, but also to the entire economy.  However, he cautioned that insurance companies will only be able to offer services if they are well equipped in terms of finance and human capital.

  “Oil and gas industry is capital intensive requiring insurance companies to equally be financially sound and have personnel well trained to understand the emerging economic avenue,” he stated.

 Security companies offering focused security services are positioning themselves to exploit the potential in offering of safety to mining organisations. Sub-Saharan African Security Company Warrior Security Ltd opened office in Kenya recently to extend their services into the mining business.