Finance Ministry halts motor insurance premium increase

Daily Graphic Jun - 10 - 2015 , 23:08

The Ministry of Finance has asked that the increase in insurance premiums be suspended.

This is to allow for further education and consultation among stakeholders. The directive followed a meeting between the National Insurance Commission and the Ghana Insurance Association in Accra Wednesday.

According to the Minister of Finance, Mr Seth Terkper, the ministry acknowledged that insurance premium had not been increased for a long time.

But, he said, a comprehensive brief would be prepared from the Ministry of Finance as the basis for further consultation and education, as well as to correct some of the misinformation that was being circulated against the increase.

Upward review

An upward review of the minimum premium for third party motor insurance announced by the Ghana Insurers Association (GIA) last Tuesday created disaffection among motoring public.

The new policy, which would make private saloon car owners pay a minimum premium of GH¢1.60 daily, would culminate to about GH¢584 annually instead of the GH¢183.70 old tariff.

For taxis, they would pay GH¢1.45 daily, which amount to about GH¢529 in a year, while a 55-seater bus would pay GH¢2.96 a day, about GH¢1,080 per annum.

Additionally, commercial vehicle owners would have to pay GH¢2,000 to cover third party property damage. They are also required to pay for personal accident cover of GH¢4,000 for the driver and the conductor.

Motorcycle owners would also pay GH¢0.79 a day, amounting to about GH¢288 in a year.

Rationale

Explaining the rationale for the review to the Daily Graphic, the Head of the Technical Unit of the GIA, Mr Winfred Dodzih, said it was as a result of the increase in road accidents which had led to increasing demands for calims.

Besides, he said, the Motor Compensation Fund set up to cater for third party claimants had depleted.

“The inputs coming in cannot meet our outputs. We cannot satisfy our customers. The review is long overdue because since 2010 there has not been any increment,” he said.

The review allows car owners to purchase insurance on a short-term basis – monthly or quarterly.

Third party

In Ghana, it is compulsory for all vehicles to take a third party insurance cover to protect the lives and property of third parties that are at risk as a result of accidents.

The Compulsory Third Party Motor Insurance Act 1958 seeks to protect the interest of innocent of third parties, including passengers, pedestrians and other road users or motorists who may sustain injuries or death as a result of an accident.

It is also to ensure that compensations are paid to such victims and their beneficiaries.

Compensation cover

Motorists can also take optional comprehensive cover which allow them to have their cars replaced in case of accident or theft.

Mr Dodzih said although the comprehensive motor policy had not been reviewed the increment in the third party tariffs would in effect affect the comprehensive policy holder.

That, he said, was because of the third party component in the comprehensive insurance policy.

Complaints

Some drivers expressed worry over the reviewed tariffs, claiming that it was too high.

They added that with the upward adjustment in fuel prices, high cost of spare parts and high road toll charges, it had become increasingly expensive to run transport business in the country.

We shall be forced to pass on the cost to passengers,” they said.

Mr Patrick Ashinyo, a driver, claimed that the increases were too high, since drivers would now have to pay more than 500 per cent of the old tariff.