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| Mr Kamuzora |
Existing and soon-to-be owners of motor
vehicles should brace for higher insurance premiums starting next month
following a proposal by insurance companies towards changing current
rates.
Stakeholders are expected to meet
in Dar es Salaam today to deliberate on the new minimum premium
insurance rates before they are implemented.
The increase will not affect owners of
motor vehicles alone given the importance of the transportation sector
in the economy, according to Executive Director of the Economic and
Social Research Foundation, Dr Bohela Lunogelo.
“Any increase on the
premiums will affect prices of commodities since transporters will pass
on the increased costs to consumers.
It is also obvious that transportation
costs will increase,” the renowned economist told ‘Daily News’ in an
interview.
Dr Lunogelo said Tanzanians have had a bad legacy with
insurance companies when it comes to compensations since claims take too
long to be settled. Nevertheless,
“If there is a scientific study which
has been carried to ensure that the new rates will be able to promptly
settle claims I have no problem.
“The premiums will have impact in the
economy but on the other hand they could be welcomed to avoid losses in
the economy through closure of business when insurers fail to compensate
their customers,” he stated.
However, Tanzania Truck Owners’
Association (TATOA) has threatened to stop transporting goods if the new
rates are implemented. The new rates range between 3.5 and 9 per cent
of the total cost of the respective vehicles.
“The proposed rates are not reasonable
and they will drive us out of business. We will be forced to pay between
four to five times compared to what we pay now,” TATOA’s Treasurer and
Spokesperson, Mr Zacharia Hans Poppe, said in an interview with this
paper.
The Commissioner of Insurance, Mr Israel Kamuzora, argues that
the proposed premiums aim at creating stability in the industry by
curbing abuses such as premium undercutting by some companies.
“It should be understood that the
industry has been operating without a baseline and this has been of
concern to re-insurers and potential investors. Introduction of the new
premium is at par with other member states of the East African Community
(EAC) such as Kenya and Uganda.
“The new rates will bring sanity and
stability in the local insurance industry. They will also enable
insurers to make prompt compensation after an accident has occurred,” Mr
Kamuzora explained.
For his part, President of the Tanzania Insurance
Brokers Association (TIBA), Dr Sebastian Ndege, said his association
does not support the proposals in their totality.
“We don’t agree with everything in their
proposals, as brokers we consider the welfare of the industry and the
consumers as well,” Dr Ndege said.
Dr Ndege did not disclose areas where
TIBA is opposing TIA regarding the new proposals but said his
association has also presented separate proposals to TIRA for
consideration.
Commissioner Kamuzora on the other hand, hinted that the
new premiums will only be implemented after all interested members have
reached a consensus.
He explained further that due to
increased road accidents in the country, the motor insurance has been
making losses compared to other insurance covers and thus the need for
realistic premiums.
“I understand that the new premium may not augur
well with some players but in the long run the rates will create
stability in the industry,” he said.
An official with ATI, who did not want
to be quoted since he is not the official spokesperson, argued that the
proposed premiums in Tanzania are the lowest in the EAC.
Source: The Daily News, www.dailynews.co.tz, reported by Alvar Mwakyusa in Dar es Salaam
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