Insurance brokers are set to earn Sh3.5 billion following a recent directive by Treasury Cabinet Secretary Henry Rotich that all imported goods be insured by local underwriters.
In his directive, Rotich asked the Kenya Revenue Authority (KRA) to ensure that all marine insurance for imported goods shall henceforth be taken locally as opposed to previously when it was arranged with overseas underwriters.
The move has been lauded by the Association of Insurance Brokers of Kenya, which sees it as a major opening for local brokers who will now be able to tap into emerging opportunities in the country.
“New business opportunities are opening up for the emerging sectors including mining, infrastructure development – roads, Standard Gauge Railway, among others – all requiring heavy investment in terms of capital as well as insurance to support importation of raw materials and other finished goods,” its chairman Nelson Omolo said.
In the marine sector alone, the estimated growth is expected to be in the region of Sh20 billion in gross premium with brokers taking away an estimated Sh3.5 billion in commissions.
But Omolo said players in the sub-sector will need to pull up their sleeves if they are to fully benefit from the new directive.
“As brokers, we will seek partnerships with other organisations such as our regulator, the Insurance Regulatory Authority, and the College of Insurance to ensure that our members are properly trained and thus have the necessary competencies to handle these new opportunities,” he said.
At the same time, Omolo lauded the move to cap loan interest rates charged by commercial banks, saying it will boost economic growth.
“We are still waiting to see the full impact of the capping of interest rates. However, with lower rates on interest, we believe this will spark access to credit thereby making money more available to productive areas of the economy, including infrastructural development and more investment in productive areas. This will, in turn, directly open up new business opportunities for the insurance sector.”
The insurance sector in Kenya has been grappling with many issues that have seen penetration go down from a three percent of GDP in 2015.
It is projected that penetration currently stands at a paltry 2.7 percent. General mistrust of the sector continues to be the major cause for low penetration as more and more people shy away from taking insurance policies.
“We acknowledge that as a financial services sub-sector, we need to step up and aggressively position ourselves as the panacea to this problem. We would like to encourage Kenya’s population to consult Brokers to explain to them the fine print as well as offering best options in terms of insurance coverage,” he said.