I have just looked back at some of my articles/blogs in the last 12 months or so, and I see I have written 4 times about the new minimum rates being imposed on the Kenyan market. It all started with Fire and Consequential Loss (plus a couple of other classes) as from 1st January 2021 and now, the market is telling us that all other sectors are being affected, WIBA, Liabilities and Motor to name a few.
Sadly, despite our best efforts to get hold of the new terms and rates, the response we have had so far is ‘well we have been told but its still not clear’!
So, with only 3 weeks until these new rates come into force, no-one is really sure what they should be charging. All we can tell you is if an Insurer does not comply their reinsurance is potentially ‘null and void’ so you, the Insured, is at risk in the event of a claim.
As we have always said…whilst there needed to be a shift upwards of rates, this should have been done in a structured way, not ‘carte blanche’. Further, it should have been thoroughly thought through and categories of risks should have been considered more carefully. Just a couple of examples of what we mean….
- Under WIBA, a driver working for a Nursery, has a premium rate of 4.20%, so for every KES 100,000 of wages, the premium equates to KES 4,200. If, however, the driver works for a sugar company, the rate increases to 8.56% and a sisal manufacturer, 10.71%? If on the other hand, they work in the Horticulture industry, the rate drops to 2.268%. No-one has really been able to explain what a driver does differently, for each industry…but they are all there, in black and white…over 500 different categories!
- Then a year down the line, there is still uncertainty over the Fire rates. There is a ‘sector’ in the new rates, which fundamentally states ‘paper’. That’s it…whether you are printers, pulp paper products, maybe even paper recycling, your base rate is set at 0.75%. Unfortunately, ‘paper’ also includes businesses wholesaling paper products, which should be classed as a ‘warehousing risk’, which attracts a rate of 0.275%, almost a third. Then, to confuse us even more, there is a third option…if your business is in an EPZ, then you qualify for a rate of 0.45%? So, we ask…which one is it…to which the answer is…….
When we know, we’ll let you all know!
In summary, the Kenyan market is now very much a ‘tariff’ one…little or no competition, everyone is having to quote the same and businesses and the public are faced with higher premiums. It’s a very sad state of affairs, but no-one is listening. Until they do, I’m afraid, we have little or no choice, but to pass these increases on. Rest assured, we know a few ‘tricks’ and we are doing all we can to mitigate these increases.
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