UNDERSTANDING MARINE INSURANCE IN KENYA

January 1st, 2017 marked the enforcement of the Marine Insurance law in Kenya. This law was preceded by Kenya’s budget reading of the year 2016 by the Treasury Cabinet Secretary.  The Marine Insurance law has been in existence since 1968 and the 2016 budget speech indicated the Kenya government’s decision to enforce the law. In the past, importers into Kenya have insured their shipments in the country of origin through their suppliers. However, this new direction states that marine insurance has to be procured locally with an insurance company registered in Kenya. This is emphasized in Section 20, Subsection (1) of the Insurance Act, CAP 287 that states that “No insurer, broker, agent or other person shall directly or indirectly place any Kenya business other than re-insurance business with an insurer not registered in Kenya without the prior approval, whether individually or generally, in writing of the Commissioner”

 

Marine Insurance is undertaken by the importer to cover cargo including the vessels/flights/vehicle/ or train against incidental losses, pilferage or damage while shipping goods from one country to another. Winstone Akweyu, the Operations Manager at Siginon Global Logistics adds, “Marine insurance applies to goods transported by sea and air and also extends to road and/or rail to final destination.  This therefore means the Kenya Revenue Authority (KRA) will no longer clear shipments without proof of marine insurance from a Kenyan insurance company.” Shippers who ship on Cost, Insurance and Freight (CIF) terms will therefore need to renegotiate terms that exclude insurance to avoid double insurance and satisfy the marine insurance requirement in Kenya. The insurance industry in Kenya has responded to the government directive and developed a tailor made marine insurance product giving shippers multiple options to partner with in the selection of an insurance company.

 

Amongst the key beneficiaries in the Marine Insurance act enforcement are importers into Kenya due to the ease of accessing local insurance companies to facilitate the cover. In addition, the same convenience will have an advantage of speedy compensation in cases of damage, loss or pilferage while the cargo is in transit. In addition, the cover is affordable and gives the importer the freedom to select the insurance agency of choice and on preferred terms and conditions. The marine insurance tax is computed at 0.5% stamp duty of the consignment value. Winstone adds, “The marine insurance is cheaper when it comes to overall customs tax computation as the Kenya Revenue Authority (KRA) uses 1.5% compared to 0.25% range offered by insurance companies.”

 

On a national level, the marine insurance act has greatly contributed to the growth of Kenya’s insurance industry and provides an additional revenue channel for the Kenyan economy.

 

Should you need any further information, please email; sales@siginon.com

 

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