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.
Publisher
University of Nairobi