Customers, Insurers clash over third party
Apr 05, 2012
Members of the public took advantage of the recently concluded Royal Way Media’s fourth banking, finance and insurance expo to express their discontentment about the trend of events through which they (people) are served by the financial sector.
By David Ssempijja
Members of the public took advantage of the recently concluded Royal Way Media’s fourth banking, finance and insurance expo to express their discontentment about the trend of events through which they (people) are served by the financial sector.
The insurance subsector took a lion’s share of the raised complaints, with matters largely rotating around the Motor Third Party Insurance policy.
Speaker after speaker from an audience of about 800 people, at least 90% of them from the informal sector, talked ill of how insurance companies had fleeced public through evading claim compensation under the policy in question.
“We are demoralised by the way you do business, many of us have endeavored to pay for third party insurance cover. However, we have always suffered losses through compensating victimised people ourselves; yet such losses are supposed to be covered by the insurance companies under the policy,” said Mohamad Kasule, a resident of Kabowa in Lubaga division.
Third Party Insurance policy was established by the Motor vehicle Insurance (Third Party Risks) Act of 1989. The Act requires that in the event of an accident, the vehicle or motorcycle involved (first party), the occupants of the vehicle (second party) and the other vehicle, person or property involved (third party) be compensated by the insurance company.
The third party is entitled to compensation by an insurance company in case of an accident causing bodily injury or death of persons on public roads. The first party is responsible for its own damages or losses whether caused by itself or the third party.
However, most of the motorists that talked to Business Vision in different exclusive interviews claimed to have either fallen victims of non-compensation themselves or heard of a similar case happening to other people.
Mohammad Sherief, a cross-border trailer driver confirmed that claim compensation under Third Party insurance policy is increasingly becoming a nightmare more in Uganda than any other East African countries.
“The problem with this policy is that it’s a mandatory, meaning that whether the insurance company compensates the accident victims or not, policy holders must pay because payment is not optional,” he says.
Depending on motor type, capacity, usage, geographical limit, value, drivers’ history and market condition, third party insurance policy might cost between sh22,000 and h550,000 for cars and sh3,300 and sh13,000 for motorcycles for either four or 12 months.
In year 2010/11, the Uganda Revenue Authority registered a total of 36,473 vehicles and 85,857 motorcycles.
Detailing his explanation to the expo audience, David Tumuhaise, the technical manager at Uganda Insurers Association (UIA), noted that the industry collects billions of shillings out of the policy and regretted if it was true that some policy holders fail to get compensation.
“It’s regrettable if companies deliberately decide not to compensate clients without convincing reasons; but in such cases, the remedy would be to front matters to our association administration or the Complaints Bureau of the Insurance Regulatory Authority,” he said.
It was not possible to establish the recent monetary worth of the premium collected by the local insurance companies; but in 2008, 263,753 vehicles bought the policy, totaling to sh5.9b.
However, during the year 2010, the total insurance premium (life and non-life) income written rose to sh239.9b from sh202.05b realised during 2009.
Tumihaise attributes most of the insurance woes to lack of public sensitisation; “some people don’t even understand how the policy is supposed to help them or what qualifies them for compensation,
And when they get involved in motor accidents, they either try to negotiate with the victim and compensate them or they pay the victim before they can have their vehicles released by police,” he said.
Speaking to Business Vision in an interview, Tumuhaise also expressed dissatisfaction that compensation under the Third Party policy is premised on outdated laws requiring an insurance firm to pay only sh1m per person or a maximum of sh10m per accident no matter how many people are involved in the same.
“Motor vehicle Insurance (Third Party Risks) Act of 1988 remains one of the most critical commercial laws that need expeditious amendment to align it to the current money market value dynamics,” he said.
What should you do after an accident?
Social compassion demands that you assist the victim to reach hospital if this is required. Report the accident to the Police and then ask your motor third party insurers to assist the victim. According to the Insurance Act, the victim cannot demand compensation from your insurance because the insurance has a contract with you not the victim.
All third party claims in respect of damages to property, death or bodily injury, the third party shall proceed against the owner of the car, or the driver and not the insurer, according to the insurance Act.
In payment of claims, the insurer compensates the affected individual with a sum of money equivalent to the value of property destroyed bearing in mind the excess that is always borne by the insured.
What you need to claim third party
Before processing a Motor Third Party insurance claim, there are documents one need to get.
A Police Abstract Report to prove that an accident actually occurred and the claimant was the real victim of the accident.
A Death Certificate in case the accident victim dies. The certificate bears the cause of the accident.
A letter from the Chairman of the Local Council and letters of administration. These serve to introduce the victim especially when he has no recognised identification. Letters of administration serve the purpose of ensuring that the administrator of the estate of the deceased is the person supposed to be paid.
In the case of non-fatal accidents, a medical report and medical bills may be required to ascertain the medical expenses incurred by the victim.
Insurance certificate as proof that the insured entered into a contract with the insurance company, among others.