In last year’s budget reading, Kenya’s Treasury issued a directive to the Kenya Revenue Authority (KRA) to implement Section 20 of the Insurance Act beginning January of this year.
Well, January is here and it seems the KRA has heeded the directive. Starting this month, all imports into the country will have to be insured by local (Kenyan) insurance companies.
This is in accordance with the provisions of the said section of the Act. This is not a new law since the Section was in prior existence, only that was not previously enforced.
In a public circular issued by the Insurance Regulatory Authority (IRA), the public has been informed that all Marine Cargo Insurance (MCI) will have to be covered by local companies.
This extends to individual importers of goods such as used cars. According to the public notice, all importers and clearing agents of any goods are required to obtain a Local Marine Insurance cover and provide evidence of certification to the KRA via the online portal operated by the Kenya Trade Network Agency (KenTrade) for cargo clearance.
Here are the five steps that importers and clearing agents will now need to go through during importation of goods:
1 – At the time of shipping of cargo, the importer or clearing agent shall purchase a local Marine Insurance Cover from a registered insurance company and obtain a certificate. One can do this through an insurance agent, an insurance broker or directly through the company.
2 – The importer or clearing agent shall then access the KenTrade system via the link https://kenyatradenet.go.ke and log in via a username and password.
3 – The importer or clearing agent creates a Unique Consignment Reference (UCR) number. The UCR is a unique reference to a trade transaction. It is generated by the system and is then subsequently linked to consignment documents such as the Import Declaration Form (IDF), or permits, or exemption, or other similar documents.
4 – The importer or clearing agent then accesses the MCI registration functionality within the portal and links it to the UCR obtained in step 3 above.
5 – The importer or appointed clearing agent will then submit the online application to his preferred insurance company.
It should be noted that only insurance companies registered with the system are available to issue Marine Cover.
At the moment, only about 15 local insurance firms offer marine insurance.
While this move may sound like music to the ears of marine insurers, it is not so much to importers.
Shippers have previously lamented that the policy implementation was not well thought out, and needs to be executed in a staggered manner.
Their point of view is that if it is enforced on smaller cargo before graduating to bulkier cargo such as petroleum and grain, the government will then be able to judge the viability of the new policy and make rectifications – if need be – early enough.
This is due to concerns of the capacity of local insurers to cover high-risk shipments such as petroleum and other high-profile cargo.
On their part, the Association of Kenya Insurers (AKI) may need to demonstrate that they are capable of handling the expected surge in business and potential increase in premiums.
The IRA has announced that it will be carrying out sensitization workshops on the new regulations in Nairobi, Mombasa, Eldoret and Kisumu.
These workshops will be open to stakeholders and members of the public in general.
It may be a good idea for logistics and cargo shipment industry players to familiarize themselves with the new way of things.