African Insurance Demand Rising on Kenyan Vote, Commodity SlumpBy
Company sees premiums rising 30% annually on increased demand
More nations on continent are joining the company as members
African Trade Insurance Agency, an insurer covering political and trade credit risk across 13 nations, said it’s seeing higher demand ahead of elections in Kenya next year.
East Africa’s biggest economy is still haunted by sectarian violence that erupted after voting nearly a decade ago and claimed at least 1,100 lives. The violence slowed economic growth by two-thirds to 1.5 percent in 2008.
“We have had a lot of requests,” Chief Executive Officer George Otieno said in an interview Wednesday in the Tanzanian commercial capital, Dar es Salaam. “Most people don’t want to be caught unawares after what happened during the 2007 election.”
The underwriter owned by the African Development Bank and the governments of several African nations including the Democratic Republic of Congo and Zambia is also seeing increasing demand for guarantees from investors struggling with the slump in commodity prices, the CEO said. Some of the services provided by ATI includes protection against financial loss from political or terrorist events or non-payment of suppliers by public entities.
Ethiopia and Zimbabwe joined as shareholders in October and Ivory Coast will be admitted in coming months, Otieno said. Africa’s biggest oil producers, Nigeria and Angola, also ranked the riskiest, will probably join in the next couple of years, he said.
International insurers including Lloyd’s of London Ltd and Swiss Re AG that previously tried to cover political risk use ATI services because of the agency’s closeness to African governments, according to Otieno.
“We’re able to assist if there is a problem with a particular project,” he said.
The rising demand from the growing list of member countries could boost gross premiums by 30 percent annually over the next two to three years from $23 million in 2015. While ATI charges between 1 and 4 percent of a transaction’s value as premium, increased perception of risk has forced the underwriter to “really go to the maximum,” Otieno said.
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