Boda boda cyclists get life insurance product as micro insurance takes root

By Faridah Kulabako

Boda boda (motor)cyclists will have their medical bills or funeral expenses – in case of death – paid for by insurance companies following the launch of a low cost life insurance product on the market.

Dubbed Maisha Boda Insurance, the micro insurance product launched by Tugende, a for-profit social enterprise in partnership with Lion Assurance and Liberty Life, seeks to enable boda boda cyclists access life insurance services at a low cost.

Although the ordinary comprehensive life insurance cover (funeral and medical expenses) costs about sh100,000, annually, Tugende customers will pay only sh67,608, inclusive of motor-third party insurance.

In the event of the unfortunate, circumstances, the insured cyclist will be entitled to sh1m compensation in case of death, disability and medical coverage related to accidents.

Additionally, the package also entitles on to sh500,000 in case of critical illness or as funeral expenses in case of death.

Although motorcyclist currently pay about sh40,000 in motor third party insurance annually, it provides for compensation of only the third party injured by the cyclist to a tune of sh1m and doesn’t cater for the rider.

The Maisha boda insurance, however, will cater for all the injured persons including the cyclist.

Speaking at the launch of the product in Bukoto, Kampala on Thursday, Godfrey Buyondo, Lion Assurance Technical Manager, Operations, said going forward, micro insurance products will play a big role in bringing on board low income earners and also deepen insurance penetration.

Uganda has one of the lowest insurance penetration rates, standing at 0.86% compared to Kenya’s 3.5%, Rwanda’s 2.3% and Tanzania’s 1.1%.
 

Miriam Ndozireho, Liberty Life Business Development Manager echoed similar sentiments, saying that the product is a good stepping stone for tapping into the informal sector, using cheaper micro insurance products.

It should be noted that insurance companies are now exploring the micro insurance segment to improve their bottom lines and grow the sector.

To facilitate micro insurance in Uganda, the Insurance Regulatory Authority Chief Executive Officer Ibrahim Kaddunabbi Lubega recently alluded to the move to license micro-insurance insurance firms, to work hand-in-hand with the regular players to sell low cheaper insurance products, especially to income earners.

Micro-insurance companies will be subjected to lesser regulatory and operating requirements unlike the regular firms, including having low minimum paid-up capital.

Lessening licensing and operating requirements for micro-insurance seeks to interest potential micro-insurance companies to join the market and offer low cost insurance products to boost insurance penetration.

Tugende Chief Executive Officer Michael Wilkerson who said the decision to partner with insurers to provide a cheaper insurance product was informed by the high risks faced by boda boda riders as they go about their daily work.

“Motorcyclists are the second most vulnerable road users in Uganda by injuries and deaths after pedestrians. We need to protect them and their families,” he said.

Uganda has witnessed an astronomical growth of the boda boda businesses over the years. The growth has, however, come with life threatening challenges to both riders and other road users including deaths.

For instance, the 2014 police crime report indicates that last year, the number of motorcycle related accidents rose to 7,450 from 573 in 2005.

About 100 customers are said to have signed up for the Maisha boda insurance product.