Insurers are facing a fresh surge in claims as businesses and property owners assess losses and damage from vandalism and looting that accompanied protests to mark the first anniversary of the anti-government demonstrations of 2024.
The painful aftermath of the Wednesday protests reported in 27 counties came to the fore on Thursday as business owners who had stayed away from towns to avoid being caught up in the chaos returned to their premises.
Businesses in Nairobi's central business district along Mfangano Street, Moi Avenue, Khoja, and OTC were the most affected. Many were broken into and stock was wiped out.
CIC General Insurance had last year disclosed it paid out Sh400 million for political risks last year.
“We did a research on the same last year and of course, there was increased uptake of political risk cover after the demonstrations,” said Association of Kenya Insurers chief executive Tom Gichuhi.
Some shops were set ablaze underlining the fury of the protests. The demonstrations were infiltrated by criminals and hired goons, with the chaos resulting in scores of deaths and injuries of many individuals including police officers.
Wednesday's protests were the third public demonstrations this month indicating the exposure that insurance companies face from political risk in the country. The previous two were triggered by the killing of Albert Ojwang while in police custody.
Public demonstrations were cited as key drivers of the increase in claims paid by insurance companies last year.
The increased uptake of policies is expected to put pressure on insurers after the actualisation of the risk with the recent protests. Kenya's general insurers paid claims of Sh2.52 billion last year on their fire industrial policies –where some of the risks from the protests fall—which was more than double the Sh1.27 billion incurred in 2023.
Mr Gichuhi noted that insurers treat political risks differently with some of them having a specific class for losses arising from civil unrest while others classify them under fire insurance with a sub-category for strikes and civil commotion.
Several retail outlets including Naivas Supermarkets in Nyeri and Naivasha were looted as protests turned violent with more than 10 people killed and over 400 hospitalised.
Retail Trade Association of Kenya (Retrak) condemned the attacks noting that the looting not only hurts the spirit of entrepreneurship but also undermines job security and national recovery.
"We call on security agencies to act swiftly and decisively to protect businesses, hold perpetrators accountable, and restore calm," said Retrak in a statement.
At least 30 bank branches and auto teller machines (ATMs) including the NCBA Bank in Nyeri and National Bank in Embu were also vandalised, according to the Kenya Bankers Association.
"It is the first time that we have seen this attack. The previous ones were only attempts but not on this scale. We will discuss with the Central Bank of Kenya on how we beef up security in the unlikely event we have such demonstrations in the future," KBA's chief executive Raimond Molenje said.
He added that the affected banks are yet to compute the losses incurred from the protests. Manufacturers have also reported losses from damages and business disruptions.
"Manufacturers and business entities from various regions have reported significant damages, including looting, vandalism, injury to staff, business disruptions, and destruction of property," said the Kenya Association of Manufacturers chief executive Tobias Alando.
"This was perpetrated by individuals whose intent was not to protest but to cause harm. These acts have led to considerable financial losses to all businesses, from micro, small & medium enterprises (MSMEs) to large industries."
Government facilities were also targeted during the demonstrations with the Internal Security Cabinet Secretary Kipchumba Murkomen disclosing that at least nine police stations were targeted with five of them torched including Dagoretti, Molo, and Ol Kalou.
Medical claims are also expected from the protests with hundreds of civilians and police officers hospitalised. The APA Insurance cover the police.
More than 10 buildings, including Musa House in the OTC area, were torched during the protests further exposing insurers to claims.
Insurance companies had previously shied from political risks until 2019 when UAP Insurance, now Old Mutual Holdings, delved into the business with limited cover for motor vehicles. Insurers have, however, diversified their offerings as demand for the cover increased.
Banks are also expected to feel the pinch of the demonstrations with businesses' ability to repay debt taking a hit.
Economic conditions in Kenya have been tough, marked by an increase in non-performing loans currently at 17 percent of total credit issued. A turbulent political scene is expected to further dampen the business environment.
