The Kenyan government has recently announced a directive that will significantly reshape the country’s marine insurance landscape.
Effective February 14, 2025, all imports will be required to have locally procured marine insurance cover before clearance by the Kenya Revenue Authority (KRA). This move marks a renewed push to bolster the local insurance industry and capture a larger share of the global marine insurance market. Sunland Insurance Brokers is here to help you navigate these changes.
What is Marine Insurance?
Marine insurance is a specialized type of insurance that covers the loss or damage of goods, cargo, and vessels during their transportation by sea, air, or land. It also covers related liabilities.
This coverage extends from the point of origin to the final destination, including any storage in between. Given the inherent risks of international trade, marine insurance is a critical safeguard for businesses involved in importing and exporting goods.
The Government Directive: A Closer Look
While the concept of mandatory local marine insurance isn’t new – it was initially introduced in 2016 – its implementation has faced challenges.
This renewed government push signifies a serious commitment to enforcing the law. The directive mandates that all importers must digitally procure marine cargo insurance from locally licensed insurance companies.
These digital certificates will be processed through the Insurance Regulatory Authority (IRA) platform and electronically submitted to the KRA’s Integrated Customs Management Systems (ICMS).
Benefits of the Directive
Boost to Local Economy: The directive is expected to inject significant revenue into the Kenyan insurance sector, creating jobs and stimulating economic growth.
Enhanced Consumer Protection: Local insurers are more accessible and accountable to Kenyan businesses, potentially leading to faster claims processing and better customer service.
Increased Capacity Building: The influx of business will allow local insurers to develop expertise in marine insurance, improving their overall capacity and competitiveness.
Potential Downsides
Increased Costs: Importers may face higher insurance premiums, especially in the initial stages of implementation, as local insurers adjust to the increased demand.
Potential Delays: The new digital system, while designed to streamline processes, could initially experience teething problems, potentially leading to delays in cargo clearance.
Capacity Constraints: Local insurers may face capacity challenges in handling the sudden surge in demand for marine insurance.
What This Means for Kenyan Businesses
This directive has profound implications for businesses, particularly Small and Medium Enterprises (SMEs) that rely on imports. It’s crucial for businesses to:
Understand the Requirements: Businesses must familiarize themselves with the new regulations and ensure they comply with the digital certification process.
Shop Around for Coverage: Importers should compare quotes from different local insurers to find the best coverage at a competitive price. Sunland Insurance Brokers can assist you in this process.
Factor in Insurance Costs: Businesses should incorporate the cost of marine insurance into their pricing strategies to avoid unexpected financial burdens.
Seek Expert Advice: Navigating the complexities of marine insurance can be challenging. Consulting with an experienced insurance broker like Sunland Insurance Brokers is essential to ensure you have the right coverage.
The Role of Sunland Insurance Brokers
At Sunland Insurance Brokers, we understand the intricacies of marine insurance and the challenges that businesses face in this evolving landscape. We are committed to helping our clients:
Find the Right Coverage: We work with multiple insurers to find the most suitable marine insurance policies that meet your specific needs and budget.
Navigate the Regulatory Changes: We keep abreast of the latest regulations and ensure our clients are fully compliant.
Manage Risk: We provide expert advice on risk management strategies to minimize potential losses.
Streamline the Process: We assist with the digital certification process, making it as seamless as possible.
The new government directive represents a significant shift in Kenya’s marine insurance sector. Sunland Insurance Brokers is here to guide you through these changes and ensure your business is protected. Contact us today to learn more about how we can help you navigate this new era of marine insurance
