New maritime law fails to excite re-insurance firms
- Posted by: frokem
- Category: Insurance, Re-Insurance
Reinsurance companies say they have little to smile about in the wake of the new marine insurance law. This is because the law, contained in Section 20 of the Insurance Act that makes it mandatory for local cargo importers to insure their goods with local insurance companies, has no provision compelling firms to re-insure marine cargo with local reinsurance companies.
Kenya Reinsurance Corporation (Kenya Re) Chief Executive Jadiah Mwarania said the main beneficiaries of the law are insurance firms. “We have three re-insurance companies operating in Kenya today. There is nothing much for us to reap from the windfall expected when this law is fully entrenched. The law has little room to make it mandatory for underwriters benefiting from marine premiums to re-insure that risk,” said Mr Mwarania in an interview.
William Kiema, an Association of Kenya Insurers (AKI) official, also expressed similar sentiments, saying re-insurance companies should not expect to reap much from the law. “For an insurance company to re-insure marine cargo, the risk must be too big for it to insure it alone.
Marine cargo insurance has had a very slow uptake and reinsurance companies are yet to have its benefits spill over to them so far,” said Mr Kiema. A 2016 industry performance report by the Insurance Regulatory Authority (IRA) released on Friday shows that reinsurance business in Kenya is shrinking and reinsurance companies ought to think out of the box if they are to survive.
The premiums reported by re-insurers by the end of last year amounted to Sh17.6 billion compared to Sh18.4 billion reported by the end of 2015. This represents a decline of 4.3 per cent during the same period the previous year. Mr Kiema said AKI would announce the total dividend that insurance companies have reaped by the end of June this year since so far, little has been recorded. In another development, Kenya Re has announced plans to join the vibrant Takaful insurance market segment by setting up a new office in Sudan.
The re-insurer targets Islamic markets in Somalia, Sudan, Ethiopia, and Eritrea in an attempt to expand its scope into new frontiers. “Last year we opened an office in Zambia, which is supposed to cater for the southern Africa region – Botswana, Mozambique, Lesotho, and Namibia. We had opened another in Nigeria to cater for West Africa,” said Mr Mwarania.
Read more at: https://www.standardmedia.co.ke/business/article/2001234106/new-maritime-law-fails-to-excite-re-insurance-firms