Comprehensive Motor Policy provides cover against the vehicle, third-party liability, and yourself through the extras offered under the policy. FILE PHOTO | SHUTTERSTOCK
I have a motor insurance policy. How we can manage losses and minimise repercussions in the event of an accident?
Motor insurance is a mandatory insurance policy by law that carries two faces. First, it aims to safeguard against third-party liability, and second, against damage to a motor vehicle following a road accident.
Motor policies come in two offerings, that is, Third Party which is the minimum requirement by law to have your vehicle on the road, it mainly covers third-party persons and property against injuries/losses from an insured vehicle.
On the other hand, Comprehensive Motor Policy provides cover against the vehicle, third-party liability, and yourself through the extras offered under the policy.
What are these extras, you may ask? They include Excess Protector, Political Violence and Terrorism, Loss of Use, Personal Accident, Towing and Recovery, Authorised Repair Limit, Emergency Medical Expense, Window, Glass, Windscreen repairs, Side Mirrors, Forced ATM Withdrawals, and Theft of Personal Items.
Having highlighted the key benefits to look for when acquiring a motor policy, we must also appreciate the same have a key contribution to the losses experienced under the motor policy which has had a direct implication on the premiums that motorists are now paying.
The reinsurers through insurance companies have revised the motor ratings upward from previously an average comprehensive rate of 3 percent to now a whopping 7 percent, with a minimum premium of about Sh15,000 previously to now an applicable minimum premium payable of Sh37,500.
We have also seen a trend where some of the underwriters, having faced major blows through the loss-making policy, are now shying away from offering insurance to a certain model of vehicles and only offering third-party policies to low-value vehicles, and those that have surpassed a certain number of years, from the Year of Manufacturing.
Thus, it would only be befitting to highlight some of the reasons that have contributed to the major losses experienced under the motor policies, such as Road accidents in Kenya, through drunken driving, inexperienced drivers on the road, reckless driving, speeding, and general lack of adherence to traffic rules, bad roads, and adverse weather conditions.
Additionally, we have seen the latest trend in vehicle modification flagged, especially those under public service vehicles (PSVs) and some private owners who have gone a step ahead to modify their vehicles through the use of LP gas to mitigate the high cost of fuel to increase their profits or drivers who have installed spacers to lift their vehicles to combat poor roads, not realising in the same breathe that single action has a direct implication on the stability of their vehicles on the road.
Another factor is fraud through double insurance and the hiring of professionals to write off vehicles that owners wish to dispose of.
We have also seen the misuse of benefits, such as loss of use benefit for small accidents, not being aware this will bear an additional cost against the general repair of the vehicle and in the long run affects the loss ratio.
Finally, the hiring of young and inexperienced drivers, especially under PSVs, has directly contributed to the increase in accidents on our roads.
Having highlighted some of these reasons, we are privy and agreeable that some of these factors would be automatic exclusions under the motor policy, such as drunken driving, reckless driving, lack of adherence to traffic rules, and vehicle modification, thus despite having comprehensive motor insurance cover, the policy would not respond in such instances.
This brings us to the question, what measures can we implement to navigate these murky waters of motor insurance losses, and how can we come up with a mutually beneficial relationship between the insurers and motorists?
One of the ways is through motor insurance training which gives a better and deeper understanding to the beneficiary of the policy, how to best utilise the benefits and in case of a claim, how to proceed.
An example would be the No Blame No Excess clause, whereby if you the driver is not to be blamed for the accident, you could evade the payment of policy excess, but for one to trigger this benefit they would need the details of the vehicle blamed for the accident to be captured on the police abstract.
The introduction of motor schemes is one of the many ways to bring losses down and increase motorists negotiating power.
A fleet of vehicles under one scheme brings about risk distribution and a pool of funds, where losses are reviewed against the total premium paid.
Another way would be, the introduction of telematic devices, installed on the users’ vehicles that will monitor their general driving behaviour.
This is a mutually beneficial solution that supports more careful driving amongst motorists, and at the same time offers discounts to those who managed not to get into accidents at the end of the policy period.
Contribution to Excess through a targeted removal of excess protector benefit can also be a solution that allows motorists to partially bear the cost of repairs, which in turn will force vehicle owners to be more careful on the roads.
Ultimately, the actions of motorists have a direct implication on the current offering of the motor policy, and if we wish to see an improvement, we have no choice but to join hands and navigate through the market adjustments for a better tomorrow.
Ms Sidi is a Senior Risk Consultant at Zamara.
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