Nairobi — Demand for uptake of political risks and terrorism insurance covers by local and international companies in the country have gone up by over 50 percent in the last 12 months.
Africa Trade Insurance Agency (ATI) marketing officer Souvik Banerjea said most of investors especially with businesses which operate in certain premises are now taking the covers as the elections approach.
"Ever since the Kenyan military invaded Somalia and the threats of retaliations started coming in, the uptake of covers related to these issues by institutions have gone up. You know the terrorists have been targeting places like shopping malls, stores and other businesses where there are crowds," Banerjea said.
Banerjea however added that insurance companies in the country are in the next few weeks forming a risk pool to provide protection against risks of paying huge claims at once, in case of violence that may affect their clients.
"Currently out of the 42 companies doing insurance business in the country, 20 have agreed to support this pool and ATI along with other reinsurers has promised to offer the needed back up support," Banerjea added.
The pool is also aimed at coming up with political risk and terrorism covers that are affordable to customers unlike the current situation.
On the other hand, there has been increase in insurance uptake by banks due to decreased lending by international financial institutions, which are waiting until the end of the elections.
"A majority of these banks are now seeking cover from people like us, to protect the banks against non-payment risks by their clients or get an added form of security," ATI Chief Underwriting Officer Jef Vincent said.
Foreign importers of goods and services to both private companies and government agencies are also seeking insurance in big numbers.
This is to ensure they are secured financially in case their clients' businesses are interrupted during the election period.
"Here we are not just talking about seeing chaos. Kenya is a peaceful country. But the transition in government may bring other negative economic factors that would affect some of the key investors here and make them not be able to pay their suppliers," Vincent said.
He however urged the government to add its effort in convincing foreign investors that Kenya is a peaceful country despite the recent incidences of violence and terrorist attacks which according to him have been reported in an exaggerated manner and partially messed the image of Kenya.
"Kenya is not burning. Look like here in Nairobi, everything is going on as usual. After all, other countries have had much worse political situations, and life went on as usual. I know Kenyans have learnt and I don't think we would want our economy to back to two percent," he added.
ATI was founded in 2001 by African States to cover the trade and investment risks of companies doing business in Africa.