Kenyan underwriters are already gaining from the increased exploration of oil and gas onshore and offshore although there is no single statistic in the industry to indicate just how much the insurance players are getting.
Local firm AON which has built various products for the sector lauds a policy by the insurance regulator that has helped local insurance companies get a fronting fee payable by international companies as non of the local companies has the capacity to insure themselves and are simply just brokers.
According to the insurance regulator all explorers must seek approval from the regulator before seeking international insurance
Currently there is not a single local insurer that can afford to enter into a treaty with a reinsurer and in turn pay 10 percent of the cost of a disaster most of which total up into billions of shillings.
“This is as the amounts involved in case of compensation are so massive thus in one payout could bring down a reinsurer who handles 90 percent of compensation,” says Justus Ochieng the general manager for industry and mining.
In the offshore blow out on a BP platform off the coast of Mexico the disaster costs especially from environmental damage were in excess of $50 billion of which BP says it plans to pay from a contingent fund it has set up over the years.
Back home the industry is still in the early stages with exploration still ongoing thus most products are tailored for this stage.
The products in the market thus cover areas including hitting dry wells, see page pollution, clean ups, collapse, natural perils and loss of investment following war and terrorism.
To prepare itself for the growing industry the insurance regulatory authority has already set up a sub- committee on oil and gas to overlook opportunities and discuss policy direction in the sector.