Political risk insurance demand high amid street demonstrations

Kwee Funeral Home that was looted by protestors in Kisumu. [Collins Oduor, Standard]

The demand for political risk insurance has gone up due to increased risk awareness by both investors and Kenyan corporates on the back of the ongoing political crisis.

According to players in the insurance sector, large and medium-sized corporate firms are among entities reporting lodging the majority of requests for political risk coverage.

"Most requests are coming from corporates operating in urban areas, manufacturers and transporters of fast-moving consumer goods," Liaison Group Risk Manager Dennis Karanja told Standard Business.

"Although covering the assets remains the main focus for many clients, we are foreseeing increased interest in the insurance of loss of business (business interruption) arising out of political violence."

Various businesses have also been vandalised since the anti-government protests called by the opposition began a week ago.

"One of the greatest fears for any business is losing assets plus the inability to produce and deliver goods and services to its customers," said Mr Karanja.

"The current political environment has led to more enquiries about the exact scope of cover and requirements to accept the risk."

Opposition leader Raila Odinga has called for protests every Monday and Tuesday, accusing President William Ruto of stealing last year's election and failing to control the surging cost of living.

Police fired tear gas and a water cannon to break up protests with at least two people dead since the demonstrations kicked off.

The US this week urged restraint from all sides and called for respect for peaceful demonstrations as opposition protests in defiance of a ban turned violent.

"We encourage political leaders, protesters, and all parties to refrain from violence and rhetoric that could incite violence," State Department spokesman Vedant Patel told reporters.

"We call on government security forces to act with restraint while protecting public safety and property," he said.

Kenya's economy has a history of slowing down during election years when firms put investment decisions on hold.

Economic growth slowed to 4.81 percent in 2017 as a result of the bitterly contested presidential poll from 5.88 percent a year earlier. The deadly 2007 presidential poll sank the economy to a growth of 0.23 percent from 6.8 percent the year before.

"As risk managers, we have solutions that protect against damage to property and loss of profits following political events," added Mr Karanja.

"This includes access to cover for events such as political violence, sabotage, civil unrest, terrorism, malicious damage, insurrection, mutiny, rebellion, and coup d'etat."

"The cover can also be extended to protect against looting and transit risk to protect investors," added Mr Karanja.