STAKEHOLDERS in the insurance industry have agreed to extend by six months the introduction of new minimum insurance premiums for motor vehicles pending a thorough research to justify them, it has been learned.
The new rates, which were to become effective today, were highly criticized as unjustifiable by insurance brokers and the general public at large, as they would lead to increased transportation costs.However, this paper has learned that following a series of meetings between insurance companies, brokers, transporters as well as the Tanzania Insurance Regulatory Authority (TIRA), it was agreed that the proposed premiums be put on hold for the time being.
"For any new rates to be introduced we agreed that an in-depth study be conducted after which stakeholders will meet and deliberate," the Treasurer and Spokesperson of the Tanzania Truck Owners Association (TATOA), Mr Zachariah Hans Poppe, said. Mr Hans Poppe, who has been representing TATAO in the meetings confirmed the six-month extension.
Other sources in the industry also confided to 'Daily News' that the industry stakeholders have reached a consensus on a number of issues, one being extension of the deadline."Other issues that have been agreed upon will be announced by the Association of Tanzania Insurers (ATI) any time from now," the source, who prayed to remain anonymous, said.
An official with ATI who declined to introduce himself confirmed to this paper that an official statement regarding the matter will be made soon.The Commissioner of Insurance, Mr Israel Kamuzora, declined to comment on the matter, stating that it is ATI which should issue a statement.
Just recently, local insurance brokers challenged insurance companies to justify the proposed hike on premiums for motor vehicles. The brokers said they were not involved in formulation of the new rates.The President of the Tanzania Insurance Brokers Association (TIBA), Dr Sebastian Ndege, had questioned the urgency of introducing the new rates without conducting adequate public awareness.
"As brokers we deal directly with consumers and understand the dynamics of the industry but we were not involved in formulation of the proposed premiums. We have thus presented counter-proposals to the insurance regulator," Dr Ndege told the 'Daily News' then.
Insurance companies had through ATI proposed new premiums to TIRA which they want to be implemented from March 1, this year.
Insurers argue that apart from ensuring stability of the insurance industry, the new premiums are aimed at curbing malpractices such as premium undercutting.
However, brokers are of a different opinion, challenging insurance companies to "clean their house first" as rising premiums alone will not check abuses in the industry. "The best solution to malpractices is adhering to ethics and code of conduct to which ATI and TIBA as professional organizations must emphasize. Pricing will not address the abuses," Dr Ndege stressed.
During a recent interview, Commissioner Kamuzora said the local insurance industry has been operating without a baseline and hence leading to abuses. 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.The increase will not affect owners of motor vehicles alone, given the importance of the transport sector in the economy, according to Executive Director of the Economic and Social Research Foundation (ESRF), Dr Bohela Lunogelo.
"Any increment 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 the 'Daily News' in a recent 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.