Rwan­dan in­sur­ers re­duce pre­mium losses by 28pc

The East African - - BUSI­NESS - By KABONA ESIARA

RWAN­DAN PRI­VATE in­sur­ers have nar­rowed their net writ­ten pre­mium losses by 28.6 per cent in the first half of 2018, thanks to the growth in mo­tor-ve­hi­cle un­der­writ­ing pre­mi­ums.

Ac­cord­ing to data from the Na­tional Bank of Rwanda, the net un­der­writ­ing losses fell from Rwf4.2 bil­lion ($4.7 mil­lion) for Jan­uary-june 2017, to Rwf3 bil­lion ($3.4 mil­lion) in the same pe­riod in 2018.

The re­cov­ery comes af­ter manda­tory third party in­surance pol­icy and com­pre­hen­sive pack­ages were in­creased by 40 to 73 per cent, and from 3.5 per cent of the value of the ve­hi­cle to 4.5 per cent, re­spec­tively.

Ac­cord­ing to Na­tional Bank of Rwanda, the mo­tor ve­hi­cle claim ra­tio in the first six months reached 64 per cent, which is above the 60 per cent bench mark set by the reg­u­la­tor.

“One of the is­sues the in­sur­ers raise is that pre­mi­ums are not suf­fi­cient to cover the cost of doing busi­ness,” said Moses Nya­banda, a part­ner at PWC Rwanda. He ad­vised in­sur­ers to educate their clients on pro­tect­ing as­sets that are eat­ing up in­dus­try prof­its.

For ex­am­ple, a com­pre­hen­sive mo­tor ve­hi­cle in­surance costs about Rwf100,000 ($113) an­nu­ally, but should that ve­hi­cle get in­volved in an ac­ci­dent, com­pen­sat­ing the in­jured oc­cu­pants is more expensive. In Rwanda, in­sur­ers pay un­lim­ited li­a­bil­ity to ac­ci­dent sur­vivors and vic­tims — mean­ing claimants de­cide on the amounts to be com­pen­sated, which is not the case in Uganda and Kenya, where they have caps. In Uganda the li­a­bil­ity is capped at Ush3 mil­lion ($786).

In Rwanda, should an 18-year-old sus­tain injuries in a car ac­ci­dent, reg­u­la­tion re­quires that they be com­pen­sated for the rest of their lives as the as­sump­tion is that they would have worked for those years. The least amount the per­son is awarded is Rwf3,000 ($3.4) per day. When the Rwf3,000 minimum wage is mul­ti­plied by say 48 years, the per­son can get up to Rwf52.5 mil­lion ($59,569) — a fig­ure in­sur­ers say is too much.

In ad­di­tion, in­sur­ers say doc­tored lists of ben­e­fi­cia­ries are com­mon. They say it is hard to de­tect fraud or stop it, as cur­rent reg­u­la­tions com­pel the in­surer to pay the claimant im­me­di­ately a claim is lodged.

Pic­ture: File

A man files an in­surance claim at the Rwanda So­cial Se­cu­rity Board of­fices.

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