Why Kenya’s marine insurance uptake is a strategic necessity

As a key hub for regional trade, Kenya heavily relies on maritime activities for imports and exports. Positioned strategically along the Indian Ocean, the port of Mombasa, Kenya’s principal seaport, continues to handle vast volumes of cargo.

In 2024, the port recorded a historic 41.1 million tonnes of cargo, a 14.2 percent increase from 35.98 million tonnes in 2023. Container traffic also surged to 2,005,076 twenty-foot equivalent units (TEUs), marking a 23.5 percent rise. Additionally, transit cargo volumes grew to 13.4 million tonnes, reflecting a 17.4 percent increase.

These impressive figures underscore the port's pivotal role in regional trade and the critical need to safeguard this vital gateway into Eastern Africa.

However, Kenya – like all other nations engaged in maritime trade – must contend with the inherent risks associated with sea transport. This mode of transport is inherently unpredictable due to weather-related hazards, piracy, and operational accidents. Kenya’s coastline has, in the past, experienced instances of piracy and adverse weather conditions that have disrupted maritime activities.

Increased global trade and rising geopolitical tensions have amplified the importance of marine insurance. Risks associated with war, terrorism, and piracy are escalating, exerting a significant influence on insurance policies and premiums. Additionally, climate change has intensified extreme weather events, leading to shipwrecks, groundings, and cargo damage.

Given that Kenya imports essential goods such as fuel, machinery, and consumer products, businesses face significant financial losses if shipments are lost or damaged.

Marine insurance mitigates these risks by providing financial protection against loss, damage, or theft of goods in transit. Coverage includes incidents such as fire, natural disasters, capsizing, theft, piracy, and cargo jettisoning.

By ensuring compensation for losses, marine insurance enables businesses to recover swiftly and sustain operations, fostering confidence in international trade. This security promotes economic growth, as businesses engage more freely in global commerce, ultimately benefiting the government through taxation and port fees.

Globally, the marine insurance market grew by 35.54 percent between 2019 and 2023, reaching Sh5.057 trillion ($38.9 billion). European underwriters dominated with a 48.5 percent market share. In Kenya, marine and transit insurance premiums totalled Sh2.6 billion by June 30, 2024, reflecting a 9.1 percent year-on-year increase.

However, marine insurance accounted for only 2.2 percent of Kenya’s general insurance premiums—disproportionately low for a trade-dependent nation. While marine insurance is crucial in mitigating risks associated with global trade, relying heavily on foreign providers presents limitations that a robust local market is better positioned to address.

Recognizing the importance of marine insurance, the Insurance Regulatory Authority (IRA) and the Kenya Revenue Authority (KRA) issued a directive in January 2025 requiring all importers to procure marine insurance policies via electronic platforms from local insurers, effective February 14, 2025.

This policy shift, initially introduced through the Finance Act of 2017, not only ensures that local insurers benefit from premiums that were previously directed to foreign entities but also represents a crucial step towards strengthening the domestic insurance industry and retaining valuable capital within Kenya.

Kenya is keenly focused on developing its blue economy, encompassing fisheries, maritime transport, and offshore resources. For these vital sectors to flourish sustainably, marine insurance is indispensable for effectively managing the diverse risks associated with vessel operations, fishing activities, and logistics.

For businesses actively engaged in fishing, as well as import and export trade, securing marine insurance is not merely a regulatory obligation—it is a fundamental strategic necessity to safeguard valuable assets and ensure long-term profitability.

By mitigating uncertainties and providing financial security, insurance actively encourages greater investments in maritime ventures, thereby further propelling economic growth within Kenya.

Crucially, fostering local uptake of marine insurance offers distinct advantages beyond these general benefits. Local insurers are better positioned to develop tailored policies that precisely address the unique risks and needs of Kenyan businesses operating in the local maritime environment. Their physical presence facilitates faster and more efficient claims processing, minimising disruptions.

However, for marine insurance to take root in the country, businesses engaged in import and export activities need to shift from regulatory compliance to viewing marine insurance as a strategic necessity to protect assets and ensure long-term profitability. Moreover, premiums paid to local insurers contribute directly to the local economy, supporting jobs and businesses within Kenya.

A thriving local market also fosters the development of local expertise in marine risk management.

Ultimately, marine insurance is a fundamental component of Kenya’s trade and maritime sector. By reducing uncertainties, marine insurance encourages investment in maritime ventures, further bolstering economic growth.

As Kenya continues to expand its trade footprint and blue economy, a robust local marine insurance sector will remain a critical enabler of sustainable commerce and national economic resilience. Supporting and fostering the growth of marine insurance is not just beneficial—it is a strategic imperative for securing Kenya's maritime future and anchoring its prosperity in the dynamic global trade arena.

The writer is General manager of Minet Risk Services-Corporate division