Demand for tourism insurance covers to rise after UK lifts advisory

Caution: Sam Ncheeri, the Eagle Africa managing director at a past press conference.
Caution: Sam Ncheeri, the Eagle Africa managing director at a past press conference.

UK's review of the travel advisories imposed on Kenya last week is likely to drive the uptake of locally offered tourism-based insurance covers, whose uptake had been suppressed by the warnings.

AIG Kenya's efforts to support tourism via a Sh900 million deal with local tourist associations to cover visitors from countries that issued travel advisories against Kenya had little success.

"The insurance uptake was very small," said Kenya Association of hotelkeepers and Caterer's coast chairman Mohammed Hersi.

The British Foreign and Commonwealth Office advisory had issued a travel advisory against Kenya due to perceived insecurity at the Coast.

"It (the insurance cover) was not picking up because of the travel advisories," added Hersi.

The Coast region which depends heavily on tourism began to suffer economically with several hotel closures and hundreds of layoffs.

The FCO travel advisory meant British tourists cannot get insurance cover from the UK while on holiday in Mombasa and the Kenyan Coast between Mtwapa in North Coast to Tiwi in South Coast.

Tour operators from some major source markets such as UK, US had a hard time getting insurers to cover the few clients who wanted to take a risk and travel to Kenya's Coast as they either hiked their premiums or refused citing the advisories by their governments.

The AIG insurance cover covers medical assistance and monitoring, emergency transport to nearest medical centre, medical repatriations and personal accidents.

Another reason affecting the uptake of the cover by visitor into Kenya was lack of trust in local companies to effectively pay out claims according to other sources within the tourism industry.

"Tourism based insurance offered locally can work because it is cheaper than what they would get in their home countries. The problem is that they are worried that if anything happens will Kenyan firms pay?" posed Hersi. "That is what the tourists usually ask us."

To improve the uptake and address this matter, Eagle Africa Insurance Brokers have become the second firm to launch a travel and tourist based terror cover for inbound visitors, whose underwriter is the Lloyds of London.

The product called Tourists Liability Policy has very high benefits unlike the AIG product and covers tour operators, lodges and hotel and other players within the industry who host tourists both local and foreign, Eagle Africa said.

"Lloyds is one of the best in largest most reputable markets with decades of experience. The risk covered ranges from $2million (Sh197million) to $50million(Sh4.9billion)," said Eagle Africa CEO Sam Ncheeri.

Under the product, hotels, lodges and tour companies’ premises will be covered against terrorism activities on their premises and will also be compensated on cancelled bookings as a result of terrorism such that they will not incur losses, Ncheeri said.

Where third parties have been involved as in the case of many tour companies, the compensation shall also be taken care of by the insurer.

"The tourism players may extend to cover consequential loss cover. This basically means that in the event of a terrorism activity and the premises are destroyed, you will be compensated against the revenues lost during the time you are out of business," said Ncheeri.

Insurance agent Joakim Obulukhu whose clients include tour operators said most tourists are very concerned about insurance plans before they travel.

"They demand to know what insurance options are available when they are seeking tour packages. The demand is not the problem per se but there is need for insurers to offer a rich package with good benefits that are marketable easily," said Obulukhu.

His sentiments are echoed by Ncheeri.

"The feedback we got during our research was that the tourists ask if there is cover for them while in Kenya. Most of them actually demand one," said Ncheeri.

"We believe this cover will give a reprieve to the industry, in that it communicates security and comfort to the tourists while in the country."

Ncheeri is confident that his firm's Tourist Liability Policy will help the tourism sector in its recovery given that it is for both local and international tourists and cushions hotels and hospitality-related firms from massive losses that affect their revival incase of a terror attack.

"We see this product revamping the industry and its appetite rise exponentially. We hope to have the product not only taken up by foreign tourists by domestic tourists as well," he said.