Reports that the Insurance Regulatory Authority (IRA) has sanctioned the increased cost of transport insurance, commonly known as cartage insurance, by eight per cent are disturbing.

Raising the tax is in bad faith as it will lead to a rise in the cost of doing business for shippers, with the final cost being passed on to the consumer -- increasing the cost of living.

Cartage insurance will increase the cost of transporting products in the region as shipping lines are expected to levy the new charge on importers and exporters.

Importers and exporters have complained about the unilateral increase in the cartage premium.

The new charges will have multiple effects on local transporters, rendering Kenya uncompetitive in the region and the global market.

The new charges will raise transporters' operating costs and passing them over will lead to loss of business.

To forestall loss of business, local transporters are likely to resort to taking the bare minimum cover or using fake insurance cover, which will expose shippers to the risk of losing their cargo in transit as any damage or loss will not be compensated.

Secondly, the new charges will see the cost of goods increase.

Regionally, Kenyan exports are expected to become more expensive rendering locally manufactured commodities uncompetitive.

With the opening up of the East African region to free movement of goods and services, the comparative advantage enjoyed by our economy is likely to be eroded by the uncompetitiveness of our products.

Major exporter

Thirdly, Kenya is a major exporter of fresh produce to the Western world.

The resultant increased cost of transport will erode the comparative advantage leading to market loss to emerging producers in Africa, South America and Asia.

The new charges come at a time when importers and exporters have had to deal with increasing incidents of piracy, which have raised their operation costs substantially.

To ensure compliance with the rules, there is need to involve stakeholders in the shipping and transport sectors

The role of a regulator is to provide a platform for the various actors to consult and mutually agree on the way forward and not to issue decrees that may be seen as discriminatory.

It is not too late for the insurance regulator to re-look at the issue and ensure fair play to all parties.