UAP and ATI in political violence insurance deal

Nairobi September 08 2008 

UAP Insurance Company (UAP) and African Trade Insurance Agency (ATI), Africa's only multilateral investment and credit risk insurance Agency, have entered into a landmark agreement that will for the first time allow Kenyans to access insurance against damage resulting from political violence.

Through the political risk reinsurance cover provided by ATI (also known technically as excess of loss cover) UAP will be able to offer insurance against civil disturbance to its clients.

The UAP Managing Director, Mr. James Muguiyi, said during a media briefing in Nairobi today that the product has been tailored specifically for the needs of the Kenyan market. "It is a product we developed in partnership with ATI in response to numerous enquiries arising from the recent losses running to billions of shillings that individuals and businesses incurred during the unprecedented post-election violence in Kenya. Unfortunately a large number of them were not insured due to the exclusion of political risk from most insurance policies," observed Mr. Muguiyi.

He also disclosed that as a gesture of goodwill, UAP has paid out Ksh60 million as ex-gratia payments to their clients who were affected negatively by the post-election violence early this year.

"The collaboration with ATI is a major milestone since it enhances our capacity to cover risks that were previously not insured."

Mr Muguiyi added that it is timely as it comes on the heels of political upheaval witnessed in Kenya early this year. He said this has made insurance against civil disturbance a key consideration for corporates and individuals with growing appetite in the marketplace.

"The partnership with ATI will enable us to offer political violence as a rider to our property and motor vehicle insurance policies", noted Mr Muguiyi.

"In reinsuring UAP, ATI is fulfilling its core mandate of facilitating, encouraging and developing the provision of insurance, including co-insurance and reinsurance, guarantees and other financial instruments and services for the purposes of promoting trade and investment in Africa", said the ATI Chief Executive Officer, Mr. Peter M Jones.

Mr. Jones observed that as a result of the political violence that took place early this year, commercial banks have been cautious in lending against securities outside Nairobi and when they do, the tenors are likely to be restricted to below 5 years, in keeping with Kenya's election cycle. "The product we are unveiling today in partnership with UAP will have a direct and positive impact on the willingness of the financial sector to continue providing longer term lending, in particular in the provision of lending products to SMEs, which is a critical element in the ongoing economic recovery efforts and in achieving Vision 2030," said he.

Mr. Jones disclosed that in addition to ATI, Africa Re and East Africa Reinsurance Company (Zep Re) also underwrote the transaction locally, with ATI reinsuring itself with Underwriting Syndicates at Lloyd's of London. First City Partnership Ltd acted as ATI's reinsurance broker.

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