Insurers warn of premium hike if govt upholds Rwf3,000 compensation floor

Insurance companies have raised concerns over a provision in the newly enacted law on accident victim compensation that maintains the Rwf3,000 minimum daily compensation for victims without verifiable income. The concerns were voiced on October 31, during a session between members of the Rwanda Insurers Association (ASSAR) and the Senate Committee on Foreign Affairs, Cooperation and Security. The meeting focused on evaluating measures to reduce road accidents and enhance safety. The insurers argued that the amount is high and threatens the financial sustainability of the insurance sector. With this, they warned that an increase in insurance premiums may be inevitable. ALSO READ: Insurers petition Supreme Court over minimum wage The Rwf3,000 daily compensation rate was first established by the Supreme Court in 2016 in a ruling concerning accident victims without verifiable income. Since then, it has served as a legal precedent. ALSO READ: Govt moves to protect insurers in accident claims In June 2025, the government, through the Ministry of Finance and Economic Planning, tabled a bill before Parliament to revise this standard. The draft of the bill proposed lowering the base compensation to Rwf2,000 per day (Rwf60,000 per month) — the equivalent of the tax-free income cap in Rwanda — for victims without verifiable income. However, when the bill was passed and a resulting law was published in the Official Gazette on October 21, 2025, it retained the Rwf3,000 daily rate. Insurers’ concerns Marc Rugenera, CEO of Radiant Insurance Company, told senators that one of the main challenges affecting the sector’s profitability is the high compensation imposed by courts. He illustrated the impact – especially when people who die in accidents are young. “The Rwf3,000 daily rate amounts to Rwf90,000 per month — or more than Rwf1 million per year — even for a person without a job. When multiplied by the number of years until retirement age (65), the total becomes unsustainable for insurers.” ALSO READ: Over 165,000 set to get income tax relief Rugenera added that some employees with verifiable but low incomes — less than Rwf3,000 per day — tend to claim compensation based on the higher benchmark, even though their official earnings are below that threshold. “This was one of the issues the new law was expected to resolve, but the Rwf3,000 rate was maintained,” he said, citing examples such as construction helpers and garage workers. He warned that premium hikes are likely. “If the total premiums collected cannot cover the compensation owed to all accident victims, insurers will have no choice but to increase rates.” According to the Rwanda Utilities Regulatory Authority (RURA), motorcycles account for over 80 per cent of road accidents. Motorcycle taxi operators have repeatedly complained about the high cost of insurance, which currently stands at Rwf180,000 per year for motorcycles less than five years old. Alexis Muhizi, CEO of BK Insurance, said that studies show that premiums for motorcycles could rise even higher. On factors that could help prevent a sharp rise in insurance premiums, Muhizi said, “the first measure would have been to reduce the minimum compensation amount [the Rwf3,000 daily rate set by the court for accident victims without verifiable income].” Relevant provisions in the new law Article 12 of the new law states that compensation is determined based on the extent of the damage and the victim’s income. If a victim or beneficiary cannot prove the victim’s actual pre-accident income, compensation is calculated at Rwf3,000 per day. This base may be revised upwards through a ministerial order, the law says, adding that the order also determines the methods, requirements, and criteria for calculating compensation. Insurers urged the government to consider their concerns when drafting these ministerial orders. Promoting insurance awareness Muhizi said that insurers have set aside a dedicated annual budget of Rwf60 million for nationwide insurance education campaigns, using means including traditional and social media platforms. The funds are expected to grow in the coming years, he added. “Many people still misunderstand or undervalue insurance,” Murangwa said. “We appreciate that insurers are taking steps to change this mindset and we encourage them to continue.” Senator Hadija Murangwa Ndangiza, Chairperson of the Senate Committee on Foreign Affairs, Cooperation and Security, commended insurers for their efforts to raise public awareness about the value of insurance.

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Insurers warn of premium hike if govt upholds Rwf3,000 compensation floor