Rising vehicle repair costs, higher insurance claims and increasing compensation for road accident victims have prompted insurers to review motor third-party insurance premiums, with a possible increase of between 20 and 30 per cent under consideration.

Andrew Kulayige, chairperson of the Rwanda Insurers Association (ASSAR), told The New Times that discussions with relevant stakeholders were still ongoing and that neither the final rates nor the date they would take effect have been agreed.

Motor third-party insurance is compulsory cover that compensates third parties for injuries, deaths or property damage resulting from an accident caused by an insured vehicle. It does not cover damage to the policyholder’s own vehicle.

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ASSAR had tentatively indicated October 15 as a possible date for the revised tariffs to take effect. However, Kulayige said discussions with the Ministry of Finance, the National Bank of Rwanda and other stakeholders were still underway to determine the appropriate rates and their implementation.

"The increase is still under review, but it could be around 20–30 per cent. Once we have fully engaged with the different stakeholders, we will agree on the appropriate rates,” he said.

"The tariffs cannot remain the same, given that market prices have changed significantly in recent months, partly due to exchange-rate movements.”

Kulayige said insurers were also mindful of the potential impact of higher premiums on motorists.

"However, we want to ensure that the increase does not unduly affect the people who will bear the cost. That’s why we strongly believe that, through engagement with different stakeholders, we should be able to harmonise our position without necessarily hurting any party.”

Repair costs have more than doubled

Kulayige said the review followed a study commissioned by ASSAR from ACTSERV, an actuarial firm, to assess factors affecting the financial sustainability of motor third-party insurance.

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The study examined historical premium payments, changes in vehicle repair costs and claims arising from road accidents.

It also compared Rwanda’s insurance market with other markets, including how insurers handle compensation for deaths and payouts for vehicles written off following accidents.

According to Kulayige, the assessment found that the claims ratio — the cost of claims relative to premiums collected — for motor third-party insurance was high compared with other classes of insurance.

ASSAR also cited the unlimited liability associated with third-party insurance, particularly compensation for bodily injuries, which can result in substantial payouts.

Inflation and rising medical treatment and spare-parts costs were also identified among the factors putting pressure on insurers.

Kulayige said vehicle repair costs had more than doubled over the past four to five years, while insurance tariffs had remained unchanged for at least five years.

"The cost of spare parts and movements in foreign exchange rates have added pressure on insurers. Premiums are collected in Rwandan francs, while some repair-related costs are influenced by imports and exchange rates,” he said.

He also pointed to the cost of repairing electric vehicles, noting that while the vehicles benefit from tax incentives, imported spare parts remain subject to taxes.

"This makes repairs more expensive. The association wants to engage stakeholders on aligning the tax treatment of electric vehicles and their spare parts,” he said.

Impact to vary by vehicle category

Motor insurance premiums vary depending on factors including vehicle model and passenger capacity, Kulayige said. The impact of any tariff revision could therefore differ across vehicle categories.

Under motor third-party insurance, insurers cover eligible claims made by third parties affected by an insured vehicle, including compensation for bodily injuries.

ASSAR said the proposed tariff revision is intended to ensure insurers can meet legitimate claims while maintaining adequate protection for road users.

Claims settlement and fraud

On claims settlement, Kulayige said the process should take no more than five days once an insurer has received all the required documentation, although processing times may vary between insurance companies.

"A police report is particularly important in establishing liability and determining whether a claim is genuine and payable, helping insurers identify and prevent fraudulent claims,” he said.

Kulayige said fraudulent claims can include cases in which claimants exaggerate the extent of their injuries or the number of dependants eligible for compensation.

He said insurers work with doctors, police and other government institutions to investigate suspected fraud and ensure compensation is paid to eligible claimants.

Insurance penetration remains low

Kulayige said insurance penetration in Rwanda stood at about 2 per cent, with the industry targeting an increase to more than 5 per cent over the next five to 10 years.

"We are seeking to expand coverage to more people and businesses through products tailored to different sectors and customer needs,” he said.

ASSAR said ACTSERV prepared its actuarial report in line with insurance industry tariff protocols to help determine appropriate rates.