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.
Credit: Business Daily