Insurance firms urged to cover terrorist attacks
04 June 2014, 12:27
Nairobi - Kenya's Insurance Regulatory Authority (IRA) on Tuesday encouraged insurers to cover losses arising from terrorist attacks.
"The reality of terrorism cover came to the fore after the recent Westgate Mall attack that led to loss of lives and property running into billions of shillings," said Nkirote Mworia, the IRA Corporation Secretary and Legal Affairs Manager in Nairobi.
Insurers should openly disclose full policies to clients arguing that majority of policy holders with property investments are unaware that their covers do not include terrorism acts, said Mworia during a Law Society of Kenya (LSK) Continuing Legal Education (CLE) Seminar on Insurance Law.
In Kenya, terrorism covers for motor vehicles cost 0.25 percent of the value of the vehicle, according to Association of Kenya Insurers (AKI) Chief Executive Tom Gichuhi.
Insurance companies in Kenya said they would not pay for claims for motor vehicle and other assets damaged during the attack to clients who had not taken terrorism insurance cover.
Latest statistics showed about 20 Kenya insurers offer terrorism cover, but this number is expected to increase following that Westgate attack, as building owners also extend their covers to include terrorism.
Mworia said insurers should also inform policy holders whether they would be required to pay extra premium to be covered against terrorist acts.
"It would be proper if insurers also embrace policies that would see clients benefit from ex gratia payments following losses out of terrorist attacks," she said.
The IRA Corporation Secretary proposed that policy holders who want to insure against terror might also be requested to subscribe to additional covers.
The Insurance penetration in Kenya stands at 3.2 per cent of the country's Gross Domestic Product (GDP), largely attributed to services associated with the middle and upper class.
Mworia was responding to a question by former Speaker of the National Assembly Kenneth Marende on why many insurance companies do not issue covers against terrorism.
"Terrorism is a reality and insurance companies must start issuing covers to protect unfortunate victims," Marende said.
Marende said IRA should ensure that insurers disclose exclusions to policy holders in line with consumer protection as envisaged in Article 46 of the Constitution.
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