Insurers that covered risks arising from
political violence are expected to make underwriting profits from those
policies in the wake of the largely peaceful General Election.
There
has been minimal damage to property and business disruption following
last week’s elections compared to the violence seen in the aftermath of
the 2007 polls.
Companies spread across the country
took policies ahead of the elections to hedge their losses, with
insurers saying they expect to keep some of the premiums from the
one-year covers as profit.
Several general insurers,
African Trade Insurance Agency (ATI), Kenya Re #ticker:KNRE, and Zep Re
are among the underwriters that are expected to benefit from the
peaceful election.
“It is … not possible to give any
anticipated results of premium booked or profitability at this juncture
but we are optimistic that the book will be profitable since so far,
there hasn’t been much damage to property insured like in 2007,” ATI
chief executive George Otieno said.
Kenya Re CEO Jadiah
Mwarania said the Nairobi Securities Exchange-listed firm is also
expecting relatively smaller claims on its policies, adding that the
general political violence book in the country will record a profit.
Premiums
from this unique insurance business — which can also be extended to
cover risks from terrorism and sabotage — are shared starting from
primary underwriters to reinsurers like Kenya Re, ATI and Lloyd’s of
London.
Insurers
that will retain the premiums as profit will further benefit from
investment income as they deploy the cash in various assets including
bonds and equities.
Uptake of these covers increased in the wake of the 2007 post-election violence and terror attacks.
Most
businesses previously took policies from multinationals such as ATI and
Lloyd’s but more local primary insurers are increasingly taking on
these risks, some of which they lay off with reinsurers.
“Over
the past two years, many general insurance companies have built up a
significant capacity for underwriting political violence, terrorism and
sabotage risks,” Mr Otieno said.
Owners of Nairobi’s
Westgate mall are among the biggest beneficiaries of such covers after
they collected Sh6.7 billion from ATI, Lloyd’s and others following the
2013 terror attack on the property.
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