A dangerous precedence is unfolding in the hallways and boardrooms of local insurance firms. They have ganged up to create a cartel that unanimously and unilaterally doubled premiums for motor vehicle insurance. And they have done so right under the nose of the National Bank of Rwanda, the sector’s regulator.
It is true that financial sectors are informed by market conditions and periodical adjustments are needed to keep them afloat. But economic logic would call on them to carry out adjustments that would not scare away clients.
With the motor vehicle insurance sector, that is the last of their worries. Motor insurance is compulsory and car owners have no escape hatch, and with the new cartel, they will have no options that could ease the burden on their pocket books. This illegal cartel has sounded the death knell of free competition among insurers.
When insurers argue that there had been no adjustments since 2013, does it mean that motor vehicle premiums increase by 73% every four years?
In fact, the premiums are not commensurate with the services insurance companies give. Compensation claims take ages to settle and in many cases are slashed at the whims of insurance companies or their agents. And this has gone on unabated despite numerous complaints.
Insurance companies can afford to have the luxury to close their eyes because they hold all the cards at the moment, but should they be left the field to themselves? Consumers also should have a say or alternatives to choose from, otherwise we will be bidding goodbye to free market competition and ushering in profiteering.