NAIROBI, Kenya, Oct 26 – A cross border insurance scheme, dubbed Yellow Card, has recorded impressive growth with premium income standing at $6 million (Sh610 million) this year.
The third party motor vehicle insurance instrument under the Common Market for Southern and Eastern Africa (COMESA) has grown two-fold in the last four years alone.
On Wednesday, COMESA Director of Budget and Finance Dev Haman attributed the growth in the insurance scheme to tremendous growth in policy uptake from which has risen from 90,000 in 2009, to 120,000 this year.
“The Yellow Card has gained acceptance because it saves time and money for transporters and the business community at large. This benefit is passed on to the consumers and producers in the region,” said Haman.
The scheme covers third-party liabilities and medical expenses for the driver and passengers of an insured vehicle, should they suffer bodily injury as a result of an accident. It also facilitates cross border movement of vehicles between COMESA member countries.
Haman said the National Bureaux of Ethiopia and Kenya alone each collected an annual premium income of $1 million as those of Zimbabwe and Zambia each realised premium income of over half a million dollars.
“This is a milestone in the history of the Yellow Card operations and the National Bureaux should be commended for that record achievement,” he said.
Because it is valid in many parts of the region, transporters and motorists do not have to buy insurance cover at each border post they cross.
For example, if a Kenyan motorist wishes to drive to Harare, Zimbabwe, he will purchase a Yellow Card from an insurance company in Kenya for the required period of time and covering the countries he will be travelling through.
The scheme is currently operational in 13 COMESA countries with 190 insurance firms participating in the scheme.
Haman however said the scheme had experienced some bottlenecks that have seen it being considered as ineffective including delays in reimbursement of claims and imbalance in compensation payment in third party motor insurance laws in member states.
He said there was need to introduce new products that address the needs of motorists, investing in technology to help reduce costs and improve efficiencies that boost revenue generating initiatives.
“Compensation payments to road accident victims in the region is a very crucial issue that we would like to see addressed better,” he said.
Haman said discussions are underway to increase the limits of claims from $10,000 (Sh1 million) to $15,000 (Sh1.5 million) to facilitate compensation payments for road accident victims in the region.