Will import insurance be another business disincentive?

20Jan 2019
Guardian On Sunday
Will import insurance be another business disincentive?

RATHER low key discussion is going on concerning a move to direct importers to use local insurance agencies to cover their imports, rather than insuring their goods in the country of origin.

The change was announced last month by the Tanzania Insurance Regulatory Authority (TIRA) with explicit explanation that insuring goods at the point of origin was denying the government plenty of revenue, which was only half the proper issue.

The question is whether it is a local insurer or the reverse who is a better harbinger of the security envisaged or liabilities involved in case it comes to that,  a point about which the TIRA rationale seemed to skip.

There is an auxiliary question of best practices and reciprocity, as to whether it is a change in one direction or it is a shift in practices in both directions.

Are we demanding importers to insure goods from foreign countries with our insurers because exporters will also seek to get goods insured where they are being exported, or the contrary is likely?

There is a wider issue of best practices, as to who actually is responsible for conduct and safe passage of goods, whether it is the importer or exporter, and whether an importer receives goods upon arrival or upon exit.

Looking at the matter somewhat rapidly it appears that importers receive goods upon arrival, as between exporters and importers there is the shipping or freight agency by ship or airfreight, who would be acting for the one sending the goods, that is, exporter.

It is unclear, on the basis of what TIRA is saying, whether importers receive goods at the gate, say of a manufacturing firm in China, and thus send the goods to Tanzania and need to insure them on the way.

Or is it likely they receive insured goods from an exporter, their only link being the order, and invoice?

Assuming that in trade law it is an exporter who must ensure the safety of goods from the point of departure to the point of arrival, it follows that local insurance of such goods is either meant for the port handling safety or attribution of liability at that point.

Otherwise it is hard to see a Tanzanian importer opening an office in Shanghai just to insure goods destined for Tanzania, and close that office after the business is done. It is the Chinese exporter who would direct his agent to do so, but it is possible there is an element of insurance activity by importing firm too.

The trouble with the TIRA directive at least as it was conveyed in the media is that it is the (local) importer who insures the product, and that this is usually done with an overseas firm.

 Chances are that it is the foreign exporting firm, and it can't use a destination insurance agent. That means local insurance of imports is double insurance, just for their safety at the port. Is that not a disincentive?

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