Improve motor insurance value

Sam Samu —
AS the nation celebrates the festive season, it is important to raise awareness about motor insurance and how victims of road accidents can get compensation.

Compulsory motor insurance (CMI) as dictated by the Road Traffic Act (RTA), provides third party liability insurance cover for defined minimum limits as stated in SI 124 of 2009.

Authority to issue compulsory motor insurance is given to duly registered insurance companies by the Ministry of Transport and Infrastructural Development.

One of the critical conditions given by the Ministry of Transport is that no insurance company can refuse anyone CMI cover. The insurance industry chose to administratively split the RTA cover into four pools;

Zimbabwean registered vehicles driving on Zimbabwean roads get the version they call Third Party Insurance. Upon purchase, proof of cover is given in the form of a cover note that contains a cut-off disk containing a summary of the cover which according to the RTA, must be affixed on the insured vehicle in a conspicuous place on the vehicle. Individual insurance companies provide this Third Party cover to their own clients.

Foreign registered vehicles driving on Zimbabwean roads get the Motor Insurance Pool (MIP) insurance cover which is obtained at border entry points from the Zimbabwe Revenue Authority. Cover period for MIP matches the temporary import permit (TIP) period and conditions.

Foreign registered vehicles can also get Yellow Card Insurance, should they be registered in a Comesa member country that participates in the Yellow Card Insurance Scheme.

All insurance companies belong to the MIP and Zimra are their appointed sole agent. All insurance companies are also members of the Yellow Card Scheme termed the National Bureau of Zimbabwe. Public Service Vehicles (PSVs) must obtain passenger liability cover (PPA) in addition to the RTA cover.

The first level of enforcement is by the Road Motor Transport Department of the Ministry of Transport (RTM). One needs to simply produce the PPA cover note as one of the requirements to get the permit to operate as a PSV.

Individual insurance companies issue this cover on behalf of the consortium which, once again, is made up of all insurance companies that are authorised to issue motor insurance.

Each pool pays for its own claims. That means if one holds Third Party cover, they approach the individual insurance company that issued the cover and if one is covered by MIP or Yellow Card, which means a foreign registered vehicle, they approach ICZ or any of its members.

As for PSV owners who wish to claim for passengers injured or killed in road traffic accident, they approach the Insurance Council of Zimbabwe (ICZ).

In theory, any innocent victim of a road traffic accident is covered by any of the said policies except for the following: Non-insurance and passengers in an insured vehicle that is non-PSV. 

Non-insurance
 Non-insurance comes in the following forms: fake insurance hit and run victims; this is especially true in that insurance companies in Zimbabwe are profit making organisations and so will not entertain a victim that cannot prove that they were injured in an accident involving their insured client.

An insurance company that closes down whilst there are still some active compulsory motor insurance policies. There is need to set up an information desk, a call centre or a roll free line that road accident victims can call to get assistance where they can go to claim for compensation.

This is especially true for passengers of PSVs. Stickers giving information should be posted in PSVs complete with claims procedures should be in bus ranks and buses.

There is need for workshops to educate PSV owners, bus conductors and some such stakeholders. The stigma attached to CMI that seem to suggest that CMI is some form of tax should be removed.

Exorbitant profits in CMI pools should come to an end too. In other countries like Denmark, an insurance company cannot make more than 3 percent profit in CMI policies.

A similar model needs to be adopted here. Most of the underwriting profits of CMI policies should be channeled towards Road Traffic Safety programs and funding gaps created by the loopholes in the CMI, like hit and run victims.

Most importantly, enforcement of CMI needs to improve. Current efforts that have seen Third Party Insurance Cover issuing electronic cover notes needs to be extended to cover other aspects of compulsory insurance especially PPA cover for PSVs.

All stakeholders need to put their heads together on creating compulsory motor insurance effectiveness.

Sam Samu is a Risk Advisor with Inspro Risk Advisory. Feedback:[email protected]  (0776890897)

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