Second-hand motor vehicles at a yard in Mombasa.
Car importers have protested against an order requiring them to get local marine cargo insurance cover for all imports as at February 14, saying it is against international trade conventions.
The government, through the Insurance Regulatory Authority (IRA) and Kenya Revenue Authority (KRA), has announced that from February 14 this year, all imports will be required to possess Marine Cargo Insurance (MCI) before being cleared at the port of Mombasa.
But Car Importers Association of Kenya (CIAK) chairman Peter Otieno said Kenya is a signatory of Kyoto Convention and that importers should be allowed to choose whether or not to insure their goods.
“Insurance should be left to the importers to decide whether to take the cover or not but not to force importers to take covers. This should be a willing seller, willing buyer arrangement,” said Mr Otieno.
Mr Otieno said such arrangements should be guided by the international Commercial terms developed by the International Chamber of Commerce (ICC).
It is supposed to standardise the terms in sales contracts for importing and exporting so that each party in the contract may know the responsibilities and liabilities in the contract and the terms under which they can be able to reduce their importations costs.
“Car importers have the Term known as Cost and Freight (C&F) which means that that particular cargo is shipped under owners’ risk, just like in this country one can opt to take health cover through insurance company or not unless you want to interfere with the rights of people/citizen which the law does allow under the 2010 Constitution,” said the chairman.
“Our used motor vehicles are normally imported through C&F contracts or arrangement and will not be forced to collect unnecessary levies from our members for unwanted services,” he added.
In a joint announcement, the two state agencies, IRA and KRA, emphasised that the digital system will enhance efficiency and transparency in marine cargo insurance procurement.
In a notice dated Tuesday, January 7, the government said the digitally procured cover must be obtained from a local insurance company and the law has since outlawed sourcing such services from insurers not locally licensed under the Insurance Act.
“To ensure full compliance, the public is hereby notified that effective February 14, 2025, all importers shall be required to digitally procure Marine Cargo Insurance cover for their imports from locally licensed insurance companies,” read part of the notice.
The directive stems from amendments in the Finance Act, 2017, and the Marine Insurance Act (CAP 390), which mandate that individuals with an insurable interest in marine cargo procure insurance exclusively from locally licensed insurers under the Insurance Act (CAP 487).
The legislation also prohibits importers from sourcing marine cargo insurance from foreign insurers, thereby promoting local insurance providers and fostering economic growth within Kenya.
This move aims to ensure importers protect their cargo against transportation risks by ensuring enhanced security for imported goods and compliance with regulatory standards.
IRA said that importers who fail to comply with the demand would not receive a customs clearance certificate from KRA.
While securing insurance, an importer will be required to electronically submit the processed digital marine cargo certificate to the KRA Integrated Customs Management Systems (iCMS).
A Digital Marine Certificate will be issued against an active Import Declaration Form (IDF) where an importer will be required to fill in the necessary fields for the Digital Marine Cargo Insurance Certificate, pay the respective premiums and submit the digital certificate to the IRA electronic platform.
The IRA Platform, which is integrated into KRA-ICMS, will submit the digital Marine Cargo Insurance Certificate to KRA.
Upon receipt of the Digital Marine Cargo Insurance Certificate, the customer will receive a confirmation of successful receipt and digitization of MCI in compliance with the low.
The confirmation and approval of the Digital Marine Cargo Insurance Certificate in ICMS will facilitate the clearance of cargo in the ICMS.
“The digital marine cargo insurance certificate request will be submitted through the clearing agents’ and importers’ mobile apps, dedicated portals, or insurance underwriters platforms connected to the IRA electronic platform. The processed digital marine certificate from the IRA platform will be electronically submitted to the KRA iCMS,” read the notice.
In 2016, Kenya National Treasury amended section 20 of the Insurance Act to give local insurers a slice of the lucrative business but the law wasn’t implemented until January 2025. The change in the law is expected to open up local competition as insurance firms move to capitalize.
The IRA estimates that Kenya loses goods worth over Sh10.2 billion every year while 20 percent of the containers of accidents are due to weight under declaration.
