Insurance cover against terrorism related risk in east Africa has increased more than two folds in the last one year as the war in South Sudan rages on and Islamic militants attacks intensify in Somalia, Kenya, Ethiopia and Uganda.

Increased attacks by the Al Qeada linked group Al Shabab in the region is a key security issue facing regional businesses as they seek to increase their footprint across these countries.

The introduction of the of a new reinsurance product by Afro Asian Insurance Services, the regional brokerage representative of Lloyd’s of London, is seen as a move that will give comfort to regional business that are highly exposed to such risks.

The London-based reinsurance company set up regional offices in Nairobi last year and was the main reinsurer for Nakumatt Stores Westgate Shopping Mall branch which was destroyed during an Al Shabaab attack last year.

Before, the maximum insurance regional underwriters could undertake for a single business was Ksh400 million (US$4.7 million) but with the new product, the risk can be underwritten for up to $15.2 million.

“This additional capacity now allows insurance companies to take bigger risks relating to political and terrorism risks and offers companies and organizations more leeway to increase their investments without the worry of such risks,” Christian Ramamonjiarisoa, the Group Director for Afro-Asian Insurance in Eastern and Central Africa, told New Business Ethiopia.

“If the capacity exceeds this amount, we can still transfer the reinsurance to London for up to $40 million,” he added.

According to the 2014 Terrorism and Political Violence Map, a report is prepared annually by Aon Risk Solutions, 46 percent of the Eastern Africa region is rated as high or severe in both categories. In East Africa, terrorism stands out as the predominant risk.

Kenya risk rating is 4 (high), similar to Uganda, Ethiopia and Burundi. South Sudan is rated 5 (severe) similar to Democratic Republic of Congo and Somalia. Rwanda and Tanzania are rated 2 (low).

Demand for political and terrorism risk increased tremendously following the Westgate attack, according to A.M. Best, the international agency that provides credit ratings for global insurance market.