The Supreme Court yesterday ordered Sonarwa, one of the biggest insurance companies in the country, to pay the Special Guarantee Fund about Rwf69m for delayed payments.
"The court orders Sonarwa to pay Rwf 121 million to the Special Guarantee Fund but the fund will also have to pay Sonarwa Rwf52 million in management fees"
The Guarantee Fund was established in 1975 but operated under the management of Sonarwa since the leading insurer had a ten-year monopoly right. The law establishing the fund indicated that Sonarwa was obliged to remit 10 per cent of their car insurance premiums to the fund.
However, when Sonarwa's monopoly to offer insurance services ended, other insurance companies opened doors but they continued to channel their contributions through Sonarwa.
The insurance companies contested this arrangement of entrusting their guarantee funds to their competitor, which led to the establishment of the Automobile Guarantee Fund in 2002.
The agency has since changed to Special Guarantee Fund, and it compensates not only victims of car accidents but also other incidentals like people whose property is destroyed or get bodily injuries out of attacks by stray animals from the national parks.
Following the transfer of the Fund from Sonarwa, an audit was conducted to know the exact amount the Fund had.
The audit report indicated that some insurance companies had defaulted on their contributions which resulted to the Fund ordering the insurers to pay up.
Sonarwa owed the SGF about Rwf 31 million. According to the law, any insurance company that delays to pay the contribution is penalised 24 per cent extra on the interests per year.
In this context, Sonarwa was to pay the Guarantee Fund about Rwf 121 million.
Although the Fund dragged Sonarwa to court, the insurer also had a case in court against the Fund claiming that they were not paid money for managing and running the Fund which totalled to Rwf 52 million.
Both parties appealed to the Supreme Court and each won its respective petition. Sonarwa will have to pay Rwf 69 million to the Fund.