Car owners in Rwanda woke up one morning in January 2018 to learn that insurance companies had suddenly increased motor vehicle premiums by up to 73 per cent. The unilateral overnight decision, which would affect car owners with comprehensive and third-party insurance packages, was taken without any deliberate effort to engage stakeholders over the matter. At the time, the central bank, the sector’s regulator, backed the move although it admitted the increment could have been done gradually. And, more recently, insurance companies have significantly increased premiums for motorcycles, which has since been linked to recent commotion among taxi-moto operators. That insurance companies, or any other service providers for that matter, can come together to agree on common pricing for their products borders on cartel behaviour. The consumer is the ultimate loser in this situation. Imagine if commercial banks were left to decide amongst themselves the minimum interest rate at which to lend to clients. Like banking, insurance is a critical product and players in the sector must not be allowed to take unilateral decisions that affect clients without consultation, let alone prior warning. Interestingly, some of the insurance companies are also now on the receiving end of this culture of unilateral decisions after the Rwandan Private Medical Facilities Association (RPMFA) decided Friday to suspend contracts with three insurance companies. The health care providers accuse the three insurance firms, namely; Radiant, Sanlam and Britam, of delayed payments and had vowed not to receive patients under the latter’s insurance policy effective Tuesday, January 25. Seemingly caught off-guard, the concerned insurance companies, through the Rwanda Health Insurers Association, on Monday petitioned the Ministry of Health challenging the decision. It argued that the umbrella of the private medical facilities had no powers to suspend the contracts because such agreements are signed with individual clinics or hospitals and not with their association. The regulator seems to have been caught by surprise as well, and by the time we were writing this the government had intervened in the matter with a view to averting a potential crisis that could have affected hundreds of thousands of innocent patients. This is unacceptable but, unfortunately, it only reflects the trend we’ve seen in the sector in recent years. It is about time the regulator reigned in this behaviour – across the board.
