The recent attack on Westgate caught the country unaware and resulted in pain, anguish and losses to businesses. Its was the most brutal terrorist attack since the 1998 terrorist attack that left hundreds dead, many injured and others maimed for life. The effect on the economy would then extend to caution issued against doing business in Kenya through travel advisory by western economies. The overall effect has and will affect the economy especially sectors that highly depend on foreign investments for growth.
As the government commits to fight terror, the Star business reporter Peter Kiragu sought to find ways how business can caution against such occurrences through taking up insurance cover. With the penetration low at 3.1 per cent in Kenya, we sought to find out the need to have a cover that includes terrorism risk and other risks associated with the opening of democratic space in Kenya. We talked to Sam Ncheeri the Chief Executive Officer of Eagle Africa Insurance Brokers Limited.
Borrowing from the recent Westgate attack among other terrorist attacks experience by Kenya in the recent past, what’s your opinion on the need for terrorism cover in Kenya?
There is need for the insuring public to purchase insurance against loss or damaged occasioned by terrorism acts. This type of insurance is available and on the main, fairly affordable.
I am sure most of the affected businesses and assets like cars at the Westgate were not covered specifically against terrorism, what will happen? Will they be compensating them, what extent and why?
Contrary to general belief, some of the assets and motor vehicles had insurance extension for terrorist acts. Those who may not have had the necessary cover may have the benefit of the benevolence of the insurers and obtain compensation. They may obtain full or partial payment.
Does your company have terrorism cover and what are the items covered?
Eagle Africa has a terrorism cover for many of our clients including automatic extension covering their motor and accident policies. We have had it together with other unique covers such as against political risk like civil unrest, riots and strikes which as you know are more associated with increased democratic space in our country.
Briefly explain the scope of cover under terrorism insurance for individuals and business?
The terrorism cover for individuals shall cover and offer compensation for death and bodily injuries.
For business, the cover extends to include physical damage to the assets and will extend to include compensation for business interruption.
Where do the boundaries lie in terms of proximity?
The cover for fixed assets will be specific to locations. Cover for lives may have a world-wide geographical reach.
When Kenya Airways was affected by the JKIA fire, they were compensated about Sh240 million for losses due to interrupted operation. Under terrorism cover, can this apply?
As mentioned above, terrorism cover can be arranged for material damage and business interruption. Compensation would therefore be available if cover was requested for.
The biggest threat to insurance uptake is the cost. What are the rates for this cover?
The rates of terrorism insurance vary from one class of insurance to another. The cost is really determined by the values to be insured, location and security measures in place. People should evaluate their risk disposal and determine whether they need coverage or not. For instance, one living in a residential house in a remote area should not bother with terrorism cover, but those in high profile and concentrated gated communities should consider taking this cover.
With insurance penetration still low at 3.1 per cent, what can be done to ensure people take cover early, not play catch up after incidents happen?
We advise people to take all precautions they can to safeguard their lives and property.
Apart from terrorism, other recent risks such as civil riots and strikes have become common; do you cover this and what scope?
As explained earlier, strikes, riots and civil commotions insurance extension is more or less a standard extension of the policies now.