Why are motorists reluctant to safe safety in case of an accident?
Statistics that we’ve got signifies low uptake of a motor third celebration. This sort of insurance coverage protects you and your automobile towards monetary losses in case of an accident. It covers the prices of any harm or accidents prompted to you or different individuals.
Final yr’s statistics present nearly 550,000 motor autos and motorbikes had motor insurance coverage.
Of that, personal automobiles make up nearly three-quarters of that whereas business autos categorised as for business functions comprise a few quarter of that – which is about 120,000 autos.
That is unhappy information. In accordance with estimates from the Ministry of Works and Transport, motor autos, together with bikes are within the vary of two.5 million upwards.
Going by these statistics, not even 50 % of motorists have a motor third celebration within the nation, but it is a necessary cowl by regulation. Each motorist on the street ought to have a motor third-party sticker.
This motor third-party sticker is designed to safeguard the automobile proprietor from legal responsibility for accidents or deaths ensuing from accidents, together with pedestrians or passengers within the automobile.
If it’s a authorized requirement for motorists, why ought to it matter to me as a pedestrian?
Each single citizen deserves safety in case of an accident. It’s difficult to deal with medical payments with out protection, which may have simply been coated by compensation when you had correct safety.
It ought to be in your curiosity to confirm that the automobile you might be boarding has a motor third-party sticker, because it ensures you can be compensated within the occasion of an accident.
What explains the low uptake but it appears like a no brainer?
There are a few causes, together with misinformation. Individuals don’t appear to know how insurance coverage operates. Insurance coverage swimming pools sources from many individuals to compensate these in unlucky conditions.
Insurance coverage is the oil that runs the economic system – have a look at it because the engine that runs the automobile.
A 3rd celebration is supposed to guard you, the automobile proprietor. For each accident, in case of an damage or demise, the utmost payout is Shs1 million. If there are greater than 10 individuals, the utmost payout will probably be Shs10 million, but a motor third celebration sticker prices lower than Shs70,000, and for a motorcycle, it prices about Shs45,000. Of that, about Shs35,000 is stamp responsibility and VAT of 18 %.
So the precise price to the insurer, that’s the primary premium, is about Shs4,000. However the profit is Shs1 million within the occasion of an accident. So, you will have given the insurer Shs4,000 for the advantage of Shs1 million.
Due to this fact, for the insurer to compensate one individual, they might want to promote about 250 stickers or greater than that. It implies that for each 250 motorbikes, my legal responsibility is Shs250 million.
If you happen to have a look at our retained premiums, motor third events contribute about 1 %. It’s not the largest contributor to our premiums. There’s quite a lot of false impression that it’s our money cow. It isn’t.
For instance, a non-public automobile motor third celebration prices about Shs68,000, together with stamp responsibility and Worth Added Tax (VAT) of 18 per cent. The bottom premium is about 22,000. However for a advantage of Shs1 million to a most of Shs10 million, you possibly can see the place most threat is shouldered.
The misconceptions coupled with the archaic or out of date regulation – 1989 regulation – Shs1 million then isn’t the identical as it’s now. The 1989 regulation must be reviewed urgently. We will help the regulator on this as a result of we predict it improves the boundaries of legal responsibility. At the moment, the advantage of Shs1 million doesn’t entice many individuals and we predict it’s limiting.
With the evaluation, we’re additionally taking a look at introducing property harm and insurance coverage of presidency autos which is at present excluded from this regulation, but they trigger accidents.
You’re additionally being accused of avoiding cost of claims. Is that this so?
Look, we exist to pay claims. We don’t concern paying claims. Our statistics for paying claims are clear. All you should do is to check banking and insurance coverage. Take a look at the earnings of the insurer, writing over Shs200 billion in return premiums and take note of their backside line. How a lot are they taking residence? Of the Shs200 billion they’ve collected from you? You may be shocked that none of them has a profitability of Shs50 billion or Shs100 billion.
So our enterprise is to grease the economic system, maintain companies operating and be rewarded by a small part of what we acquire to run the companies. A lot of the revenue ranges are within the vary of Shs3 to Shs4 billion but they collected far more than that.
One other factor, if you’re the motor third celebration, it’s your accountability because the motorized vehicle proprietor to inform the insurer of any accident that has occurred.
What’s the position of enforcement?
The insurer (firm) has tasks, however the enforcer of the regulation is the police. We’ve got seen the tendency for kitu kidogo – giving and taking bribes and discovered that bribes are literally dearer than the price of motor third celebration stickers. Think about you driving from Kampala to Masaka and it’s a must to provide kitu kidogo thrice en route your means, which could possibly be the quantity you want for a sticker for an entire yr.
