The Insurance Fund Office (IFO) responsible for ensuring insurance coverage for all citizens that might be harmed by car accidents through compulsory third party insurance policies is going to introduce a new insurance policy soon. The introduction of the revised new bill means an increase in premium payments for car owners and better insurance coverage for ill-fated citizens. The office has collected more than 33.9 million birr from premiums paid to insurance companies to compensate for any fatalities that might occur due to hit and run cases in the first year of its operation.
“We have revised the third Party Insurance Policy proclamation. We have also prepared the procedures that need to be in place in order to implement them. Once the two documents has been approved by the Council of Ministers and the House of Peoples Representatives’, we will implement it soon,” said Isac Abera, General Manager of the fund office.
“The main goal of this office is to provide insurance coverage for any damage that might arise from car accidents. Though it is not practical to provide 100 percent insurance for any accident that might occur, we have to provide victims with reasonable compensation. The financial source to do that comes from insurance premium collected from car owners. In order to provide citizens with reasonable compensation, we have to increase the premium,” Isac added.
The office compensated three individuals since the compulsory third party insurance came to effect in September last year. It paid 65 thousand birr for two deaths (40 thousand and 10 thousand each) and 15 thousand for an injury that occurred due to a hit and run.
Out of more than a dozen insurance companies operating in the country, seven of them paid close to one million birr for emergency medical services, over 16.5 million birr for death and injury, and over two million birr for property damage in the last Ethiopian budget year. These seven insurance companies are processing claims that sum up to close to 2.4 million birr for emergency medical services, over 30.3 million birr for injury and death, and a little over 2.6 million birr for property damage according to the general manager of the fund office.
Currently, there are 15 insurance companies operating in the country while a dozen more are under formation.
The insurance fund provides victims with a maximum of one thousand birr for emergency medication, 15 thousand birr for injury, 40 thousand birr for death and 100,000 birr for property loss.
“There are physical injuries which are almost equivalent to death. This kind of damage definitely needs compensated more than the current 15 birr. The same is true with the one thousand birr paid for emergency medical aid. That needs to be improved,” said Isac while explaining the driving force behind revising the recently enacted law.
Since the third party insurance scheme came into effect on September 11, 2011 almost 400 thousand vehicles were bought the insurance policy. This level of insurance coverage represents about 98.8 percent of the vehicles currently functioning in the county. According to a data obtained from the National Transport Authority Office, there are close 404 thousand vehicles in the country.
Prior to the establishment of the Insurance fund Office, out of the total number of vehicles in the country, only 109 thousand vehicles had insurance coverage of any sort before to the enactment of the compulsory insurance scheme. Only 35 percent of the vehicles that had insurance coverage had third party insurance willingly.
Insurance companies sell the insurance policy so that they can provide the office with 10 percent of the premium they gather. Thus, the insurance fund will compensate the uninsured part of the community in case of an accident.
Though the insurance premium laid on vehicles depends on the power of the engine and its service time, the minimum rate is 440 birr. The Vehicle insurance alone mobilizes about 2.2 billion birr of the Ethiopian insurance industry.