New rule on marine insurance attracts shipping firm to East Africa

A regional shipping agency has now focused on East and Southern African countries to make shippers buy marine insurance in their respective countries.

Kenya has already set the pace, with the Insurance Act requiring that all imports are insured by Kenyan underwriters.

Last week, permanent secretaries of the Ministries of Transport and Trade in Kenya, Tanzania, Uganda and Zambia met in Mombasa where they directed that Intergovernmental Standing Committee on Shipping (ISCOS), where they serve as the co-ordination committee, spearhead the Marine Cargo Insurance initiative in all the member states. 

ISCOS was formed by the four states in 1967 to perform various functions on their behalf such as negotiation on freight rates, fighting against unjustifiable surcharge and other charges on seaborne cargo.

ISCOS has already held meetings with the Pensions and Insurance Authority of Zambia, the Insurance Association of Zambia (IAZ), the Uganda Insurance Association, the Zambia Shippers Council (ZSC), the Uganda Shippers Council (USC) and the Tanzania Shippers Council (TSC), said Kenneth Mwige ISCOS secretary general.

“The policy directive from ISCOS’ coordination committee gives it impetus to drive to on-shore MCI in the region. The projected savings and retention of hard currency in ISCOS member states’ economies runs into several hundred million dollars every year for the region,” Mr Mwige said.

A meeting between ISCOS and Zambia’s stakeholders is scheduled for early December in Lusaka, and is expected that action will be taken by the government of Zambia, which is a major exporter of raw materials as well as being a major importer of finished goods.

According to ISCOS, Burundi, Congo, Kenya, Rwanda, Tanzania, Uganda, Malawi and Zambia, exported insurance premiums on marine worth $ 4.89 billion between 2009 and 2013.

“Almost $5 billion in only one electoral cycle donated by warm, kind and generous Africans to appreciative, graceful and eternally friendly foreigners,” said Mr Mwige.

Uganda has also complained of huge premium revenue ceded to foreign marine underwriters.  Data compiled by Uganda Insurers Association last year showed that the latter have received an estimated $335 million in the past four years.

According to the Insurance Act 2011, all exporters and importers are required to procure marine insurance with local companies, but various agencies particularly the Insurance Regulatory Authority and Uganda Revenue Authority have not been aggressive in enforcing this law, according to Mr Mwige.

There is no restriction on a country to enact laws to protect its domestic insurance industry.