Importers will from January 1, be required to insure their cargo locally in a new government directive aimed at taping into the multi-billion sector in favour of local insurers.
Transport Cabinet secretary James Macharia yesterday said importers should commence voluntary procurement of local marine cargo insurance from November 1, ahead of the full implementation next year.
This is in line with the Treasury Cabinet secretary Henry Rotich’s 2016/17 June 8 budget speech directive that the Kenya Revenue Authority liaise with other stakeholders to implement section 20 of the insurance Act.
“Commercial imports from January 1, 2017 have to be in compliance with Section 20,” Macharia said .
The government has set up a Marine Cargo Insurance Task Force spearheaded by the State Department on Shipping and Maritime Affairs Principal secretary Nancy Karigithu.
“The implementation of this policy on marine cargo insurance will also have a significant, positive knock-on effect on other sectors of the economy, including job creation while building a stronger revenue base for the government’s development agenda,” the CS said.
The incentive will be a major boost to the local insurance market with Kenya being a net importer.
The Kenya National Bureau of Statistics Economic Survey 2015 shows the country imported goods worth Sh1.57 trillion, out of which 90 per cent were insured with offshore underwriters.
PS Karigithu said the move will create an effective claims management process, bolster the local insurance market and boost the economy .
“We have a strong and vibrant insurance industry. The new directive will be a game changer in the country. It will increase efficiency and create an effective maritime trade regime,”Karigithu said.
She said unlike the previous years where importers have had challenges in processing loss claims from foreign firms, claimants are assured of an easy process locally.
“It will increase transparency and even reduce administrative procedures,” Karigithu said.
Imports are expected to reach Sh 2.2 trillion by 2020, yielding a potential marine cargo insurance spend of between Sh28 to Sh30 billion annually, the ministry said yesterday.
In 2015, total Kenyan marine cargo insurance premiums amounted to Sh2.9 billion, a paltry 10 per cent of the potential market.
Total commercial motor insurance gross direct premiums amounted to Sh22.5 billion, while that of private motor insurance was Sh16.3 billion in 2014.