Importers should review their import contracts carefully to avoid paying twice for cargo insurance as Kenya's mandatory local Marine Cargo Insurance (MCI) requirement takes effect, the Shippers Council of Eastern Africa (SCEA) has said.
The advice comes as Kenya's mandatory local Marine Cargo Insurance (MCI) requirement takes effect, changing how goods entering the country are insured.
Importers and manufacturers are adjusting to the changes in international trade following the enforcement of regulations requiring all imports destined for Kenya to be insured by locally licensed underwriters before they can be cleared through customs.
Kenya Association of Manufacturers (KAM) chief executive Tobias Alando said the manufacturing sector, a key importer of machinery and raw materials, is keen on the pricing of local marine insurance premiums.
"They should be very competitive inline with global market rates. Secondly, clarity should be put on the current existing insurance contracts on how they should be retired without affecting the business relationships," Alando told the Star.
The new rules, which came into force on July 1, are intended to retain insurance premiums within the country, strengthen the local insurance industry and improve oversight of imported cargo.
This will be achieved through a fully integrated digital verification system linking the Insurance Regulatory Authority (IRA), the Kenya Revenue Authority (KRA), eCitizen and licensed insurers.
The regulations effectively end the long-standing practice under which many importers relied on foreign insurance arranged under Cost, Insurance and Freight (CIF) contracts, forcing businesses to renegotiate supply agreements and adopt new international shipping terms.
SCEA chief executive Agayo Ogambi said importers must ensure they structure their contracts correctly to avoid paying for insurance both overseas and locally.
"Importers must ensure they don't pay for insurance twice. They must use the most appropriate Incoterms," Ogambi said.
He said that since Kenyan law now requires marine cargo insurance to be sourced from locally licensed insurers, the traditional CIF arrangement is no longer suitable for imports into the country.
"Importers will have to review their terms of importation, taking cognisance that CIF is no longer applicable. This will definitely affect existing long-term contracts," he said.
SCEA recommends that importers adopt the Cost and Freight (CFR) Incoterm (International Commercial Terms), under which the overseas supplier caters for transport costs while the Kenyan buyer procures marine cargo insurance from a local insurer.
According to SCEA, capital goods, including machinery and industrial equipment, motor vehicles and electronics have historically recorded some of the highest levels of foreign insurance, often because foreign suppliers dictated Cost, Insurance and Freight (CIF) terms.
The council said importers buying goods from China, India, Europe and the UAE accounted for the majority of premium outflows.
Incoterms, developed by the International Chamber of Commerce, are globally recognised trade rules that define the responsibilities of buyers and sellers, including who bears the cost of shipping, insurance and customs obligations.
While the council had previously raised concerns over the operational readiness of the new system, Ogambi said the establishment of a digital platform integrating the IRA, KRA's Integrated Customs Management System (ICMS) and eCitizen had addressed one of the industry's key concerns.
"IRA has since developed a digital platform that connects the IRA, KRA's Integrated Customs Management System and eCitizen, enabling importers to digitally acquire and submit their Marine Insurance Certificates. This is commendable," he said.
He, however, urged regulators to ensure the digital platform remains stable and that insurers offer competitive premiums comparable to those previously available in international markets.
The council also wants the Commissioner of Insurance to clarify how cargo already on the high seas under existing foreign insurance policies will be treated during customs clearance.
"We request the Commissioner to make a pronouncement on how goods already on the high seas, and which already have insurance paid for, will be cleared. We propose that the commencement affects Import Declaration Forms registered from July 1, 2026," Ogambi said.
SCEA said it is working closely with the IRA and KRA to help its members transition smoothly to the new regime.
KAM, the Kenya Private Sector Alliance (KEPSA) and SCEA had previously cautioned that compulsory local insurance could increase import costs, limit flexibility for firms already covered under global insurance programmes and expose businesses to delays if digital systems malfunction.
The new rule nevertheless continues to attract opposition from some importers.
Motor vehicle importers remain the strongest opponents of the directive. Car Importers Association of Kenya (CIAK) national chairman Peter Otieno said imported vehicles are already covered by comprehensive international marine insurance arranged at the point of export.
"Forcing importers to purchase an additional insurance policy locally amounts to duplicate coverage with no corresponding benefit to consumers or businesses," Otieno said.
Despite the resistance, compliance with the new law is now embedded in KRA's Integrated Customs Management System, meaning imported goods cannot be cleared unless a valid Marine Cargo Insurance certificate issued by a locally licensed insurer has been digitally verified.
