INSURANCE companies that pledged to pool premiums for political risk and terrorism covers have until tomorrow to each pay up their Sh2.2 million contribution to the kitty.
The idea of pooling resources for political risk and terrorism covers was brought up by Association of Kenya Insurers to make it affordable to insurance firms to offer this product to their clients as demand goes up ahead of the March 4 general election.
"I hope they will not ask us to change the deadline," AKI executive director Tom Gichuhi told the Star in a phone interview. The pool will enable local firms buy a joint reinsurance cover to transfer their risks to.
Africa Trade Insurance Agency (ATI) is expected to be the reinsurance partner for the firms as it has been working together with AKI on the modalities of setting up the pool.
Last week, ATI said it expects the first premium installment to the pool to be paid for before the elections. It has emerged that several international reinsurance firms which have deals with local insurers are cutting back their risk exposure by between 30 and 40 per cent because the country is being perceived as highly risky.
This has led to premiums rising to over 50 per cent making them too expensive for most people to afford, hence the need for a local insurance pool for political risk and terrorism cover.
At least 20 companies are said to be party to the premium pool and Gichuhi said he is optimistic that they will pay up given the importance of the cover at this time.
The idea of political risk and terrorism pool by local insurers was mooted after the 2007/2008 elections which caught many insurance firms, the business community and individual clients unprepared.
Most clients then did not have the cover and insurance firms had to pay some select claims on an ex gratia basis. This means paying on good will and not acceptance of liability because the claim does not meet the terms of the existing insurance contract between the two parties.