Providers of public transport services worry that new motor insurance prices are too high for meeting their costs of providing the services and have urged the government to consider working with insurance companies to reduce the new premiums.
Insurance companies in the country have unanimously announced an increment of 73 per cent for mandatory motor third-party insurance premium, which was implemented effective January 1, 2018.
But transporters are already feeling the pinch for the increases and the chairperson of the Rwanda Federation of Transport Cooperatives (RFTC), Ludovic Twahirwa Dodo, told The New Times in an interview last week that it’s time to do something about the hikes.
“Our main wish is that officials should do something as soon as possible; like working with insurance companies so the prices can be normalised, otherwise the prices are too high,” he said.
Dodo said that the hikes have driven car insurance prices three times and now it takes more than Rwf4 million to get comprehensive insurance for a Coaster bus whose annual insurance used to be Rwf1.4 million.
He said that getting comprehensive insurance for a bus carrying 75 passengers is now Rwf7 million while it used to be Rwf2.5 million.
“People in charge of transport know it’s a problem and we are waiting for them to do something. I have hope that they will do something because this is a big problem; I don’t know how public transport can work with these insurance prices in place,” he said.
Both the Central Bank (BNR) and the association of motor insurers in Rwanda, Association of Insurers in Rwanda (ASSAR), have sanctioned the premiums’ increase, saying that the move is in line with saving the country’s car insurance industry from collapse.
The Association of Insurers in Rwanda president, Gaudens Kanamugire, has said that the country’s car insurance has been doing poorly and that increase in premiums was needed to ensure that insurers get both profits and the ability to meet their obligations to clients.
“Our market given the historical financial situation, especially for motor vehicle insurance has been doing poorly for the past five years. In fact, if you examined most members’ books, you will discover that we are making losses of more than Rwf6 billion per year, mainly on this particular product,” he said.
But the hikes for car insurance premiums continue to worry many clients, with the most concerned being those who provide public transport because their services affect many people in the country.
Dodo, whose federation comprises of twelve cooperatives with over 300 cars, said that soon passengers will start feeling the pinch if nothing is done to reduce the car insurance prices.
“People will definitely feel the pinch if nothing is done about this problem,” he said.
The Managing Director of Royal Express, Nilla Muneza, agrees that people will soon find it difficult to move around if the new car insurance prices are not revised.
For his company, Muneza said that the new prices have meant paying double on third party insurance while he is paying three times the previous price for comprehensive insurance.
“We risk stopping our services but we are waiting for the government to do something about it. These prices are beyond people’s means and the government should rethink them,” he said.
The Spokesperson for Rwanda Utilities Regulatory Authority (RURA), Tony Kuramba, said that the body has also officially received transporters’ complaints about insurance hikes and has started discussions with them to find an agreement on what to do next.
“What affects transport concerns us all. Continuity of service is necessary for citizens but also investors can’t make losses in the process,” Kuramba said, explaining that discussions from the meeting with public transporters will be made public soon.
In support of the new prices for insurance premiums, the National Bank of Rwanda (BNR) said in a statement on Monday that if the insurance sector was to collapse the consequence on the country’s economy would be catastrophic.