The-Accountant-Jul-Aug-2017

Economy
a ship’s captain follows a rigid protocol
in terms of the route taken and the time
taken for the cargo and the vessel to
reach the intended port of destination.
Because if there is any discrepancy or
violation in terms of the route taken,
i.e. if the captain varies or digresses
in his route from the one originally
intended as a part of the ship’s course,
then even if there is any mishap
occurring to the vessel or the cargo,
the insurance claim will be rejected
completely without any possibility
of the claim being reimbursed to the
claimant at some future date after a
few tough negotiations.
Therefore it becomes very
important that a ship’s captain takes
due consideration about the prescribed
routes so as to avoid a failed insurance
contract because of an unplanned loss
due to the deviation in the route. This
would bring about not just caution
on the part of the captain but would
also reduce the possibility of losing
important insurance claims because of
inadvertence and negligence.
Another important aspect of
having marine insurance is that a
transporter can choose the insurance
plan as per the size of his ship, the
routes that are taken by his ship to
transport the cargo and many such
minor points which could go a long
way in significantly affecting the
transporter. Since there are various
plans and policies in place which spell
out how to cover not just the cargo
but also the vessel, the transporter can
choose and avail the best policy that
suits his business.
Marine insurance is a safe haven
for shipping companies and importers
because it helps to reduce the aspect of
financial loss due to loss of important
cargo. Also, it helps to bring about to
the transporting companies and to the
receiving parties, the duty, dedication
and the straightforwardness of the
insurance companies.
From the time the insurance act
comes to effect, all direct marine
insurance must be placed locally. This
change provides insurers with an
opportunity for profitable growth and
much needed diversification from the
volume-driven business of motor and
medical amongst others Awareness
in the market is partly a perception
issue. Many of the large importers
are placing some if not all of their
insurance locally anyway. Closer to
source, they feel like they can have a
good relationship with their brokers
or insurers. But Kenya’s insurers have
a responsibility to demonstrate that
they have the capacity and expertise to
deliver full cover marine insurance inhouse
without settlement delays.
Market research will help Kenya’s
insurance companies to design
effective strategies for marketing
marine insurance. Their go-to-market
approaches should target the right
market segments. In addition to
educating their agents about the retail
market for marine insurance, insurers
can use cost-effective technologies like
mobile applications to help customers
compare products and prices.
One of the main concerns of
the importers has been the capacity
of local underwriters to handle
large shipments. Local insurers are
taking steps towards addressing
these concerns. Co-insurance allows
multiple insurers to cover the risk of
valuable contracts, which should help
to spread risk in the market.
In 2014 five insurance companies
in Kenya formed a consortium to offer
the police force medical insurance
cover. Similar kind of arrangements
are likely to continue emerging and
becoming a norm in the insurance
industry. Co-insurance can help to
optimise the total capacity in the
market and thereby help reduce the
overall cost of the insurance as each
insurer would tie up less capital than
if they took on the whole risk. Coinsurance
can help smaller insurers
participate in the marine insurance
segment easily.
In co-insurance customers would
still deal with the lead insurer with
whom they may have a long-standing
relationship, but still benefit from
lower insurance premiums. While
the challenges raised by importers are
not unfounded, it is fair to say that
Kenya’s insurance industry is capable
of underwriting marine business with
similar if not identical products to
those that are already on offer. But the
insurance industry still has some way
to go to ensure that importers gain full
confidence in the level of cover being
offered and benefit from competitive
pricing.
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