Jubilee, ATI in $384m political cover deal

Currently, ATI is in partnership with Africa Reinsurance, the East African Re-insurance Company and Lloyd’s of London.

“The affiliation has enabled ATI to create a unique product that local East African insurers can access and then pass on to their customers alongside their existing policies,” Mr Kinloch said.

He added that the East African insurance market is characterised by high fragmentation, relatively low penetration and significant concentration in short-term business. “This adds up to the intense competition as insurance companies run for the same market,” he said.

So far, the demand for the product has grown tremendously, especially after the impact of the economic slump.

“We expect the demand to continue appreciating as investors and local insurance companies seek options to cushion themselves against these types of risks. In the next three years, we expect that all insurers will be offering this cover.” Mr Kinloch said.

Despite a school of thought that corruption risk falls under a political risk cover, analysts say the risk is a fidelity guarantee that only covers the integrity of people. In fact, they argue that corruption cases should not be insured as it will encourage the vice in public office.

Sammy Makove, the chief executive officer of Kenya’s Insurance Regulatory Authority, says the insurance industry in the region should consider developing a product that will offer a solution instead of running away from the risk of corruption.

“While not judging or at the least condemning the industry, the question we should all ask is whether there is a solution to this risk which seems phenomenal in Africa,” said Mr Makove.