SA Insurers Advise Kenya on Political Risk Pool

October 13 - In a bid to encourage foreign investment into Kenya, the government has decided to set up a political risk insurance pool - and South Africa is keen to help with advice.

The political risk insurance pool essentially protects products and companies against civil strife in a particular country. The main characteristic of this type of insurance is that it is affordable to the average company.

For over 30 years, South Africa has run its own pool, the South African Special Risks Insurance Association (SASRIA).

SASRIA underwrites political risk insurance products when other insurance companies cannot or will not.

One of the big advantages of SASRIA is that it is guaranteed by the South African government, and Kenya needs to decide whether it wants to go with this format or not.

The other option is to use economies of scale where insurance companies cannot cover the cost of the payouts resulting in civil strife.

While the South African model seems good in theory, it is not favored by many countries since government bureaucracy can sometimes stand in the way of claims payment.

SASRIA has shown its willingness to guide the Kenyan insurance market.

"We are open for talks and our team will be on standby for discussions," said Phyllis Masaba, who serves as the Managing Director of SASRIA.

There are currently only 16 political risk insurance pools in the world, with SASRIA being the only operating one on the African continent.