VAT – Some positive news!

For those of you that read my regular articles, thank you, and I hope they are of use/interest. One of the biggest topics recently has been the issue over VAT and whether insurers pay claims, including or excluding VAT and whether, as a registered organisation, you should set your sums insured with or without VAT. Below is the previous link to my initial blog :-

Click here to read the blog

Seven months after the new Finance Act was signed off and the VAT status ‘clarified’ under insurance claims, not one insurer has ‘nailed their colours to the mast’ and come out and said how they intend to deal with the issue. We have pushed for confirmation/clarification with insurers, the AKI and AIBK, but no-one appears to want to be first.

Following discussions with two of the largest Insurers in Kenya, Jubilee Allianz (JAZ)and Sanlam General Insurance they have advised that the matter is still being discussed, but they have now agreed the following for all JWS policyholders.

For all VAT registered policyholders, all claims will be settled including VAT.

Many of our clients have asked whether their sums insured (values) should now include VAT or not. For now, no decision has been given to us by JAZ or Sanlam, but I am pleased to advise that, until confirmation is provided, underinsurance rules will not apply, providing the only reason for the underinsurance is as a result of our clients not including VAT.

In simple terms, if you have insured an asset for KES 1m and, including VAT the cost to replace is KES 1.16m (incl. VAT) JAZ/Sanlam will pay the full KES 1.16m sum and not penalise you for the shortfall in the sum insured. Of course, if you have insured for only KES 500,000, then the usual equation of average (underinsurance), will apply, which is 1,000,000/500,000 = 50% underinsured, so 50% of the claim only will be paid.

This may not be the final solution on the issue, but until Insurers make their decision, it protects all our JAZ/Sanlam clients, which is a very positive thing. We are asking other insurers as well, so watch this space.

If you have any further questions or comments on this, please get in touch:  or Tel: + 254 (0) 709 455 000.