Insurance and reinsurance

Captive insurance

Summarise any captive insurance regime in your jurisdiction as applicable to aviation.

Pursuant to Regulation 5 of the Civil Aviation (Insurance) Regulations 2009, aircraft registered in Kenya are required to be issued with a certificate of insurance by a company registered in Kenya under the Insurance Act to carry on aviation insurance business. However, the Regulations permit the Commissioner of Insurance to approve the issuance of insurance policies by any other insurer.

Cut-through clauses

Are cut-through clauses under the insurance and reinsurance documentation legally effective?

There are no statutory restrictions on cut-through provisions and they are considered legally effective and subject to principles of the laws of contract.

Reinsurance

Are assignments of reinsurance (by domestic or captive insurers) legally effective? Are assignments of reinsurance typically provided on aviation leasing and finance transactions?

Assignment of reinsurances is considered legally effective.

Liability

Can an owner, lessor or financier be liable for the operation of the aircraft or the activities of the operator?

Apart from the circumstances of strict liability in relation to an owner, discussed in question 34, Kenya does not create a regime for strict liability for parties without operational control of an aircraft.

Strict liability

Does the jurisdiction adopt a regime of strict liability for owners, lessors, financiers or others with no operational interest in the aircraft?

Under section 59(2) of the Civil Aviation Act, the owner of an aircraft shall be held strictly liable for material loss and damage caused by the aircraft to a third party or property, unless the loss or damage was contributed by negligence of the person by whom it was suffered. Where such material loss or damage is caused in circumstances in which damages are recoverable in respect of such loss or damage by virtue only of section 59(2) and a legal liability is created in some person other than the owner to pay damages in respect of such loss or damage, the owner shall be entitled to be indemnified by that other person against any claim in respect of such loss or damage. Pursuant to section 59(3), where the aircraft has been demised, let or hired for a period exceeding 14 days and during such time the owner had no operational control over the aircraft, the liability under section 59(2) shall be borne by the person to whom the aircraft has been demised, let or hired.

Third-party liability insurance

Are there minimum requirements for the amount of third-party liability cover that must be in place?

The Civil Aviation (Insurance) Regulations require a commercial aircraft to carry insurance in respect of passenger liability, cargo, baggage and mail risks. In addition, it also states that no person shall fly or cause or permit any other person to fly an aircraft, unless they have an insurance policy that covers third-party risks, which, as per the Regulations, has a set minimum of approximately US$600,000.