Fire Insurance Practice in Kenya

Abstract

Fire insurance is a branch of general insurance business which takes care of risks associated with property. This proj ect was embarked on to redress the apparent lack of awareness of fire insurance. It's main objective was to investigate into and document the fire insurance practice in Kenya. The primary data for this project was collected using questionnaire and interview methods. Secondary data was collected through literature reviews of books, newspapers and magazines in the Lower Kabete Campus, Kenya Re, The College of Insurance and The Commissioner of Insurance libraries. The findings of this study can be' used as pointers or guidelines to the practice of fire insurance in Kenya. From the secondary data gathered, it was established that there are 39 insurance companies underwriting fire business. Old Mutual Insurance company transacts life business only. There are 3 reinsurance companies in Kenya, namely Kenya Re, Zep Re and Africa Re. East Africa Re was established when this project was being compiled. It was established that there are several categories of intermediaries who participated in one way or the other in the fire insurance practice. Among these intermediaries, we have 168 registered brokers, 8024 registered agents, loss surveyors, loss adjusters and investigators. The findings also show that most insurance companies offer fire commercial/industrial, domestic package, all risks, computer and contractors all risks policies to their insureds to cover fire risks. Apart from just the simple insurance cover for fire insurers offer other services such as surveys, loss adjusting and advise insureds on risk improvement methods. It was also established that insurers have different practices when it comes to underwriting. Thus not withstanding that most insurers regard the seven underwriting factors outlined in table 14 as important, their underwriting practices will differ from one insurer to another. That is why discounts and loadings vary from one insured to another and are based on the information provided by the proposer (insured to be) in the proposal form or the surveyors report (where a pre-acceptance surveyor is conducted). Further, it was established that insurers differ in their claims practice, there are certain factors which they all consider when settling claims. To guard against fraudulent fire claims, insurers appoint adjusters, surveyors or investigators to investigate and furnish them with a report about the fire claims lodged. They also require the insured to call the fire brigade immediately a fire breaks out, report to the police and fill a claim form. The Kenya fire insurance market consists of sellers, middlemen and the buyers. The sellers (Insurance Companies) do not follow the modern marketing concept but instead sell their services directly or through middlemen. The most popular method of getting new business is through insurance brokers and/ or agents.This study also established that most companies reinsure risks in excess of their capacity. In addition, it is compulsory to Exceed 25% of each and every risk underwritten to Kenya Re, In the treaties 25%, 5% and 10% of the treaty business go to Kenya Re, Africa Re, and Zep Re respectively. Finally, the findings of this study have come up with 7 underwriting factors that insurers consider when writing fire insurance. These are summarised in table 14.