Understanding Marine Insurance in Kenya
Insurance refers to “Protection against future loss.” Marine insurance ‘insurance’ is the protection against loss of boats, ships, and cargo carried in them. Kenya’s marine insurance was recently declared a local affair when the Treasury Cabinet Secretary Henry Rotich said in June 2016 that KRA required all local importers to procure marine insurance from Kenyan insurers.
On January 1, 2017, Marine Insurance Act was passed into law, although some segments still require further deliberation, you can now buy a marine policy in Kenya. There is still anxiety between some importers who point concerns to the scope of coverage, pricing, capacity and claims settlements. Marine cargo insurance protects owners against losses or damage to merchandise shipment while in transit in and out of the country. It is an all risks policy subject to exclusions on the described goods and the type of packaging.
For the local insurers, this was a long-awaited change. World bank’s latest economic research Kenya’s imports saw a sharp increase from 6.2% in 2016 and a projected rise of 7.6% in 2017/18. In the past, our weak legal framework and insufficient local market knowledge prevented the uptake of marine insurance offered by Kenyan insurers. The new change has brought a new tremendous opportunity for the consumer and the insurer’s convenience as well as profitability in Marine Insurance.
Large corporate importers have been using local insurers to safeguard their interests and foster a healthy relationship with their agents/brokers for better deals and quick claims settlements. The new move has encouraged other regular importers to source for cargo insurance from local insurers. It also ensures that local transporters and shipping companies get immediate assistance for sea damage claims.
Why you Need Marine Insurance
Ship transportation encounters a lot of perils ranging from huge storms, piracy and cross-border vandalism and shootouts. Marine insurance is therefore, an unavoidable protection for all the stakeholders involved. Transporters now have the option of selecting insurance plans commensurate with their cargo size, vessel capacity and the routes taken on sea voyages. Marine insurance provides good claims to transporters and corporations; it has to be understood that marine insurance is complicated and strict more than any other line of insurance in the industry.
Unveiling Marine Insurance, What is covered
- Marine Cargo: cover provides reliable protection from the warehouse to their eventual overseas destination.
- Warehouse-to-Warehouse cargo insurance policy compensates external physical loss or damage to goods from causes such as:
- Expenses incurred to mitigate a loss
- General Average losses and contributions
- Landing, warehousing and forwarding costs incurred of an insured peril
- Loss or damage from war, strikes, civil commotion or riots
- Theft and pirate hijacking
- Non-delivery and Shortage
Marine Cargo Insurance Requirements
Following various stakeholder meetings between KRA, KMA, and AKI an implementation process roll out of 1st Jan 2017 was agreed upon reaching a consensus. KENTRADE was appointed as the sole agency for the marine business community to register on the online Kentrade Portal (Single Window System) directly or with the assistance of clearing agents.
Step by-step Application Guideline
- The Insured selects their ideal insurer from uploaded list in the Kentrade website.
- Insured fills an application form (may ask for help from their agent) and submit it through the web portal.
- The Underwriter receives the application e- alert request and begins processing the details and raising a quotation, and certificate number among other valid details.
- Once approved, the insurance company will generate a Marine Cargo Insurance certificate (MCI) for clearance.
- The cargo importer must indicate their preferred insurance dealer capturing details of all the shipment through the recommended portal.
- Insurer approves an online premium and requisition.
- The Importer can print the certificate to be presented at the customs office (KRA) for goods clearance.
Marine insurance is a safety haven for shipping transporters and big corporations because it significantly reduces the financial loss caused by loss of cargo. Also, it helps to streamline shipping companies and their receiving counterparts towards responsible transportation of bulk cargo overseas.