Claims lodged with the company had reached Sh55 million by the end of last week, mainly from small businesses that were either looted or burned during the violence resulting from a disputed presidential vote tallying process.

The company expects this figure to go up because only less than 10 per cent of the businesses covered under the microinsurance scheme have forwarded their 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 vandalised.

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.

Mr Nelson Kuria, the managing director of the CIC, said the decision to honour the claims is based on the company's business model and social considerations. "Ours is a cooperative insurance with a social consideration, different from  commercial insurance companies," he said.

"When you are in this kind of business you cannot be a hard-nosed capitalist."  This, however, has not been the case with other insurance companies.

In a paid up advertisement, the Association of Kenya Insurers and the Association of Kenya Reinsurers says in part: "The (insurance) industry would like to advise members of the public in general and those who have insured their properties in particular, that loss or damage arising from political risks is not covered." However, the two bodies offer consolation by saying that they are willing to discuss claims arising from the disturbances "positively."

CIC is the market leader in Group Life business and the only microinsurance financier in Kenya. CIC currently insures microfinance related  schemes. It has insured a total of 163, 784 individual members with a total sum insured being Sh17. 76 billion as of December 2007.

It offers microinsurance products that cover death and permanent disability, funeral expenses, personal accident, fire and burglary. Others include comprehensive Inpatient family medical cover personal accident, funeral expenses and livestock insurance

Mr Kuria said the decision to pay the claims arising from the political risk is because microfinance unlike the conventional commercial insurance products is not run using the traditional business model.

"Microinsurance products have minimum exclusion," said Mr Kuria. "The kinds of people who are interested in these products require simple and straight foreword products."

CIC has been sending 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.