Challenges In The Uptake Of Marine Cargo Insurance In Kenya

Abstract

Despite the fact that modern insurance has been practiced in the emerging and developing economies since the early 20th Century, it is still a fact that insurance uptake is still very low compared to the developed economies. The lack of development of the insurance sector in many of these economies is a matter of concern, as research shows that the sector can contribute to both financial and economic development. This study set out to determine the challenges in the uptake of marine cargo insurance in Kenya and the possible solutions to the challenges. Insurance uptake or penetration refers to the ratio of Gross Direct Premiums to the Gross Domestic Product (GDP) of a country and it varies greatly, reflecting different stages of economic development (Masese, 2013). To achieve the objectives, primary data was collected through the use of questionnaires. Underwriting managers, business development managers and branch managers were interviewed from 36 different insurance companies. It was established that there are many challenges and factors causing low uptake of marine cargo insurance in Kenya and these include; procurement of marine cargo insurance from the overseas insurance markets, lack of knowledge and awareness of the benefits of marine cargo insurance amongst the insuring public, negative perception of marine cargo insurance by the importers and exporters, lack of trust in the insurance companies because of nonpayment of claims or lengthy claim processes, perception that marine insurance bought overseas is less expensive, lack of comprehensive and effective regulatory regime which inhibit the growth of marine cargo insurance, shortage of skilled and experienced manpower in marine insurance, lack of collaboration and co-operation between various key stakeholders in the maritime sector as well as various government agencies in the maritime sector. The Insurance Regulatory Authority plays a central role in fast tracking the uptake by implementing Section 20 of the Insurance Act Cap 487 and enacting other appropriate legal framework in collaboration with other Government compliance agencies. In partnership with the Association of Kenya Insurers which is a body that provides a forum for all insurance companies, the authority can also play a critical role in creating public awareness about marine cargo insurance and the benefits of procuring marine cargo insurance from the local insurance market.