Boda bodas to cover passenger insurance

Thousands of boda boda and tuktuk operators will be compelled to have third-party insurance cover to protect their passengers and pedestrians in the event of an accident.

The Insurance Regulatory Authority (IRA) has proposed changes to the motor vehicle insurance rules introduced in 1999 that will make it illegal for the motorbike taxis to operate without covers for their passengers.

Currently, motorcycles and three-wheelers used for non-public services like social, domestic and leisure purposes are mandated to acquire third party insurance.

The insurance regulator says the inclusion of fare-paying motorcycles has been prompted by the rising number of accidents that have left many injured and unable to foot hefty bills.

The new directive is set to bring in a new business line for insurance companies who will provide cover for the nearly 1.5 million motorcycles plying various routes in the country.

“There is no legal requirement for the operators to take up insurance policies as boda bodas and tuktuks are not indicated in the category of motor vehicles used by fare-paying passengers,” said Godfrey Kiptum, the IRA chief executive.

“This leaves room for speculation as to whether they ought to take insurance cover or not. The law, however, provides for insurance cover for motorcycles and motorised three-wheelers used for social, domestic and leisure purposes.”

This comes at a time when motorcycle taxi companies like Bolt are expanding in Kenya with backing from investors betting that the meteoric rise of two-wheeled taxi firms in Asia can be replicated in some of the fastest-growing economies in the world.

The idea of booking a motorbike taxi through a company that has trained drivers and provides passengers with a helmet appeals to some commuters in Kenya’s towns, especially Nairobi.

The regulator said the Insurance (Motor Vehicle Third Party Risks, Certificate of Insurance) regulations will be amended to require all passenger-carrying boda bodas and tuktuks to follow the new rules.

“There has been a high rate of accidents occasioned by boda bodas leaving the injured fare-paying passengers with no recourse or access to medical services,” said Mr Kiptum.

Kenya, like most African countries, offers a huge potential for motorcycle ride-hailing firms due to low personal car ownership, rapidly expanding populations and a lack of efficient mass transport systems in fast-growing cities that are clogged with cars.

While informal motorcycle taxis have been around for years, the new companies are hoping to win a market share by offering trained, accountable drivers and the convenience of booking rides through a mobile app.

This is the second time in three years that the State is seeking to make it compulsory for boda bodas to take third-party cover amid the rising number of accidents that have left many injured and unable to foot hefty bills.

In 2019, Parliament rejected the Treasury’s push for compulsory third-party insurance cover for boda bodas and tuktuks, citing lack of public participation in the changes.

Insurers’ lobby, Association of Kenya Insurers (AKI), has backed the proposals, arguing they will boost the confidence of millions of Kenyans who use boda bodas and tuktuks and other road users.

“We need to protect Kenyans. When you jump onto that boda boda, you need to be sure that the least it has is third-party cover. Boda bodas knock people dead and injure others. These people need to be compensated,” said Tom Gachupin, AKI chief executive.

Last year, 439 passengers died from motorcycle-related accidents, more than the double the fatalities in 2016 at 217.

However, the growing number of deaths has not dampened the popularity of boda bodas among Kenyans.

Official data shows annual registrations have doubled over the past five years to stand at 252,601 compared to 2016’s new listings of 123, 539. Motorcycles are fairly cheap, retailing at between Sh65,000 and Sh130,00, thus enabling many youth to acquire them for business.

Increased demand for bikes has also attracted several companies that have set up assembly plants in Nairobi and Mombasa for imported completely-knocked-down units.

Besides the popular TVS, other models on Kenyan roads are Japan’s Honda, Indian firm Bajaj’s brands such as Boxer, Toyota Kenya’s Yamaha as well as a myriad of low-cost Chinese brands.

Honda opened a local assembly with an initial capacity of 25,000 units a year in 2013.