Westgate Mall victims to miss out on compensation for lack of terror cover

By NICHOLAS WAITATHU

Businesses that have not insured against terrorism, including those at the Westgate Mall, will have to bear with huge losses and costs.

This is despite  terrorism cover being one of the cheapest in the market.  Insurance industry players yesterday warned that those who lost properties and were not insured against terrorism will mostly likely not be compensated. 

Association of Kenya Insurers  Chief  Executive Tom Gichuhi said the uptake of terrorism cover in the country, which is being offered by about 20 companies, is still low.

 This has led to huge loss of properties damaged in terrorist attacks. “In the Westgate Mall incident, if vehicles and businesses were not insured against terrorism they will not be compensated,” he said.

Seek payment

Gichuhi made the remarks yesterday during the opening of the third insurance village at the Nairobi International Trade Fair grounds. 

 “Currently we have between 15 and 20 insurance companies offering terrorism cover,” he said. “However, not many consumers have embraced the product; they are only rushing to seek payment when terrorism attacks their properties.”

He said demand for the cover is expected to go up after the Westgate Shopping Mall attack. Two days after the incident at Westgate, clients started calling underwriter offices reporting damage to their vehicles, businesses and tools of work as well as to seek compensation.

But by yesterday, it emerged that most people may not be compensated from the losses incurred. Underwriters will most likely apply the proximate cause principle.

This means that if a car was insured against theft or fire, the owner may not be compensated by his insurance company even if it got damaged through an inferno while parked at the ill-fated mall.

This also applies if a car was stolen in the confusion arising from the attack.

Insurance Regulatory Authority Chief Executive Officer and the Commissioner of Insurance Sammy Makove said the demand for the terrorism cover is likely to go up.

This is as people realise the importance of widening their protection cover. “We expect more uptake of terrorism cover in the near future. This will help them avoid incurring losses in case their property is damaged in a terrorist attack as happened in the Westgate incident,” said Makove.

Changing dynamics

Insurance industry captains say the terrorism cover ought to be embraced by more businesses owing to the changing dynamics in the global markets.

UAP Managing Director James Wambugu said the price of the cover is small compared to the total rate of the sum insured of the other products. “For example, if a client is paying four per cent of previous premium for a vehicle he or she needs to add 0.25 per cent as cost of the terrorist cover. This makes it the cheapest product in the industry,” said Wambugu.

He said even individuals who have covers on various issues, for example, personal accidents, can still widen the cover to embrace terrorism.

 Makove said the insurance industry has a low market penetration level of 3.1 per cent compared to the global benchmark of more 6 per cent. 

However, Kenya is doing better compared to the rest of East Africa.  The regulator boss called on industry players to simplify the language used for the products.