Insurance companies in the region are now eyeing a $170 million marine insurance dividend following the Kenya National Treasury’s directive to cargo importers to insure with local insurers from January 1, 2017 when the new law takes effect.

The new requirement comes at a time importation of high worth equipment and raw materials is expected to increase as a result of the massive infrastructure projects underway in the East and Central African regions.

The requirement for local insurance is contained in Section 20 of the Insurance Act and it will now be the duty of the Kenya Revenue Authority to oversee its implementation by importers to show their insurance contract with a local firm before clearing goods.

Currently, it is a requirement that imports be verified in the source country under the Pre-Export Verification of Conformity (PVoC) mechanism set up by the KRA and the Kenya Bureau of Standards.

Kenya’s Transport Cabinet Secretary James Macharia said tly the marine insurance segment currently is handled by foreign firms covering more than 90 per cent of the cargo cleared at the Mombasa port.

“We are typically losing more than $250 million annually in exported hard currencies to foreign, offshore insurance companies and industries,” Mr Macharia said.

The Insurance Regulatory Authority chief executive Sammy Makove said the cost of the marine insurance will be about 0.5 per cent of the value of the imports.

“I would like to assure importers and the public in general that our insurance companies have the capacity to locally insure and even re-insure the marine business,” Mr Makove said.

The Chairman of the Association of Kenya Insurers Patrick Tumbo however says that the insurers in the country are well capitalized to handle these bulk cargos.

“Most of our members share well capitalized and we will be able to insure all these goods irrespective of the size and cost,” said Mr Tumbo.

According to the Kenya Economic Survey 2016, the total value of the country’s imports last year stood at $15 billion with a potential premium of $108 million at an average rate of 0.5 per cent.

Last year, more than 35 underwriters, transacted marine business, with just five, writing a total marine premium of more than $3 million and a further 13 underwriters securing deals of marine premiums of over $1 million.