Motorcycle insurance premiums have risen drastically, with some policyholders citing a threefold increase, which has irked taxi moto operators.

Insurers have cited the hefty bills they pay in compensations for injuries or deaths caused by taxi motor accidents as the major reason for hiking the insurance premium.

However, operators have opposed the decision saying the reasons are unrealistic, arguing that even if that was the case, the premiums should not be increased by a huge magnitude.

Information that The New Times got from Radiant Insurance Company indicates that the annual insurance premium increased from Rwf61,666 to Rwf153,280 for a motorcycle that was manufactured five years ago or less.

Motorcycles that were manufactured six to 10-years-ago pay an insurance premium of Rwf166,220, up from Rwf61,666 while those that were made more than 10 years ago pay Rwf180,160.

Ovia Kamanzi Tuhairwe, Deputy Managing Director of Radiant Insurance, told The New Times that the risk rises as the motorcycle gets older.

The new prices were set last month.

"If we maintained the Rwf61,666 insurance premium per motorcycle per year, the insurance business would collapse,” she said as she attempted to justify the increment.

Christophe Ntabanganyimana, a taxi moto operator from Gasabo District, appealed for the reversal of the decision saying it would affect lives of many Rwandans.

Since he started the motorbike transport business four years ago, he says he has never been involved in any road accident, and hence never claimed for any compensation his insurer.

Local insurers have also fuelled public outcry after they classified all motorbike insurance under the category of commercial insurance, including the ones used for private transport.

A Rwamagana-based resident who uses a family motorbike for transport to and from work in Kigali along with his wife said he was considering selling it following the rise in insurance premium.

"I used to pay about Rwf50,000 for my motorbike insurance per year, but now, I am told to pay Rwf160,000. This hike is a big blow on our livelihoods,” he said.

Tuhairwe said that motorcycle used for private errands were earlier not subjected to the premium increases.

However, the prices were increased after realising that taxi moto operators were registering their bikes for travel or work purposes

However, she insisted that motorcycles belonging to recognised organisations including NGOs and public entities will not be subjected to premium hikes.

Motorbike insurance premiums was also one of the six major subjects of debate during Plenary Sitting of the Chamber of Deputies which was held virtually on Tuesday, May 4.

The session was convened to adopt the assessment of the 2019/2020 report by the Chamber of Deputies’ Committee on Economy and Trade on the National Bank of Rwanda.

John Mirenge, Chief Executive Officer of Prime Insurance, said that the company did not increase its motorcycle insurance premiums although said the firm was making losses on such insurance product.

Accidents and related compensations blamed

Tuhairwe said that motorbikes are much involved in accidents, and that the compensations paid for the related claims are far more than the premiums they were paying.

"For Radiant, in 2020, we collected Rwf2.5 billion in motorcycle insurance premiums, but we paid compensation claims amounting to over Rwf4.7 billion in accidents that motorcycles caused, either to the passengers they were carrying, or other vehicles,” she said.

Also, she said, the minimum amount of Rwf3,000 – equivalent to Rwf1 million per year – which judges base on while determining indemnities for an accident victim who has no defined salaried job is a major concern to insurers.

She said that it means that the amount will be multiplied by the number of years that a person – especially the young one, say aged 20 – had before reaching retirement age which 65 years. Lowering that amount, she said, can help lower the motorcycle insurance premiums.

"For people who have jobs, it is fine, we base compensations on their salary. But, for those who do not have formal employment, we request that their compensation be based on, say, Rwf1,000 per day, instead of Rwf3,000, she said, indicating that the latter was even higher than about Rwf1,500 daily pay for a freshly recruited primary school teacher.

MP Théogène Munyangeyo, Chairperson of the parliamentary Committee on Economy and Trade, said it was exposed that motorcycle insurance premiums were increased because motorcycles are involved in many accidents.

He added that some insurers were not providing motorcycle insurance because they said it was causing them losses.

"If there is no change in regulation and traffic management to discipline taxi moto operators, we might end up in a situation where no motorcycle will get insurance,” he said. "And, even the Special Guarantee Fund which is mandated to compensate victims of accidents caused by the uninsured motorcycles, would collapse in the long term.”

Dilme Niyonzima, Director Insurance and Pension Supervision at the National Bank of Rwanda, said that the central bank does not set or regulate pricing of the insurance products.

"Prices are set by the insurance companies based on different factors including the nature of risk, risk exposure, risk frequency and severity. This means that the higher the risk, the higher the premium rate and vice versa,” he said.

The central bank, she said, requires that each insurer should have a strategic underwriting and pricing of its insurance products which is certified by an independent actuary in line with the company’s risk appetite and exposure,” he indicated.

Denise Rwakayija, Executive Secretary of the Rwanda Insurers Association (ASSAR), also told The New Times that the association does not set prices for insurance companies, rather they are set by based on risk appreciation, and each firm is free to choose what insurance products to offer in line with their business.