Kenyan cooperative insurer, CIC Insurance Group, took a clear stand to pay claims resulting from losses due to political violence, unlike some insurance companies that have attached conditions to honoring such claims.

Post-election related claims paid by the company amounted to about Kshs. 100 million (USD 1.2 million), mainly from small businesses owned by members of co-operatives and microfinance entrepreneurs that were either looted or burned during the post election violence. This figure is expected to increase once all the claims are reported by the displaced members. After the violence, CIC sent assessors to the affected areas to determine the claims arising from the losses instead of waiting for the affected business people to come and file the claims.

However, not all insured were affected by the violence that rocked parts of the Rift Valley, Nyanza, Western, Coast and Nairobi provinces. The decision to pay the claims is seen as a precedent in a country where insurers do not necessarily cover losses arising from political risk.

It is also a major lifeline to the small scale businesses, some if which could have collapsed if the owners did not have alternative sources to revive their businesses.

Small business people who had borrowed to set up their businesses would also have had a double tragedy, because they would have been required to continue servicing the loans by the lenders, even when their businesses have been vandalized.

The decision to pay up the claims is also seen as a major effort in boosting the confidence of the public, especially the majority who have no access to insurance. It will also show the public the gains and the importance of having an insurance policy, which can help one absorb shocks arising from calamities. Micro insurance products have minimum exclusion and people who are interested in these products require simple and straightforward policies.

The decision to honor the claims is based on the company’s business model and its social considerations. As a cooperative insurance company, CIC has a social consideration which is quite different from commercial insurance companies. This has now set a trend in the otherwise strait-jacket industry, and other insurance companies are now including political violence as an insured risk.

By December 2011, CIC was the 2nd largest insurance company in terms of market share with a premium turnover of Kshs. 6.7 Billion (USD 79 Million). The company is the market leader in group life business and microinsurance. CIC has created a focus on microfinance institutions and currently has insured over 1 million members with a sum assured of approximately Kshs. 250 Billion (USD 3 Billion), most of which is in credit life business.