Insurers eye windfall ahead of August polls
Association of Kenya Insurers (AKI) predicts a bountiful 2022 for the insurance sector after dodging coronavirus bullets in the last two years.
In its projections for the year, the industry lobby group singled out political violence and terrorism indemnity covers as a key insurance class of business that could propel this year’s growth.
AKI’s view follows an impressive performance in 2021 when the industry’s premiums by long-term insurers soared to Sh58.66 billion between January and June of the same year as the economy started to recover from virus shocks.
Insurance Regulatory Authority (IRA) data shows the jump represented a growth of 22.6 per cent compared to 8.2 per cent swell in a similar period last year.
However, political violence and terrorism indemnity covers whose appetite is expected to rise ahead of the August general elections, will be a marginal spike, according to AKI’s chief executive Tom Gichuhi.
“While we are expecting the appetite to increase this year, I do not foresee a huge spike owing to the fact that Kenyans have matured and that the exposure may not be as big as it was in the past,” he said yesterday in a telephone interview.
Adding that, “We are seeing from our members an increasing demand for such covers which are normally signed up from existing policies such as personal accidents and fire covers by policy holders but not as a standalone policy.”
Terrorism and political violence insurance (PVT) covers an individual or company against physical loss and damage, as well as business interruption costs, naturally brought by terrorist act or acts of political violence such as riot, ethnic conflicts, rebellion and insurrection among others that ordinarily ensue during and after national polls – akin to incidents that followed the 2007 polls bedlam.
Interruption costs
Standard homeowners’ policies do not specifically reference terrorism but, as your home insurance covers damage to property and personal possessions due to explosion, fire and smoke, acts of terrorism are generally covered.
It is a trend AKI boss says has gathered momentum since 2007 when businesses and individuals alike suffered losses from the violence, prompting the need to take up PVT insurance covers.
“I think we learnt our lessons from that experience and the uptake has been on a gradual growth in the last decade even though we feel public information and awareness is still needed on that front,” said Gichuhi, who also reckons that the overall industry growth in 2022 could surpass last year’s figures.
That growth, according to him, pivots largely on last year’s government easing of lockdown restrictions and curfew lifting during the third quarter of the year which saw firms recommence near full operations and rehiring.
Stanbic Bank Kenya Purchasing Managers Index (PMI) Survey for December 2021 shows that private sector activities picked up to a 14-month high as demand for commodities and services improved, which added to the signs that the government stimulus policies were gradually kicking in.
