The Ghana Insurers Association (GIA), the trade association of insurance and reinsurance companies, has defended the upward review of the minimum premium for third-party motor insurance, explaining that the motor insurance department risks collapsing if the adjustments are not made.
But some commercial drivers in Accra have threatened to go on strike if the GIA goes ahead to implement its new rates for third-party motor insurance policy.
They argue that insurance companies do not readily pay claims in the event of accidents -- a situation they say has a negative impact on their work.
However, addressing the media in reaction to concerns expressed by motorists over the review on Monday, the Chief Executive Officer of the GIA, Mr Atsu Menyawovor described the hikes as legitimate and realistic.
The insurance industry on Monday commenced the implementation of a new method of pricing its third-party risk and liability that saw an 800% hike in premiums for motor insurance.
The hikes angered drivers, who threatened to form their own insurance companies. "We are very much surprised at the Insurance Commission because it is too barbaric to tell somebody you are increasing his premium by 800%," protested the Chairman of the Ghana Road Transport and Co-ordinating Council, Alhaji Baba.
But the GIA maintains that the hikes are legitimate and realistic.
According to Mr Menyawovor, the premiums have been low for far too long, adding even road tolls, booking fees paid by drivers were going up.
“It’s instructive to note that almost every injury or death resulting from a road accident results in a claim payable by an insurance company, and the amounts could be as high as GH¢220,000 and even more especially when a court order is given,” he stated.
He explained that insurers have had courts awarding up to GH¢10 million when the premium paid was only GH¢53.
Mr Menyawovor wondered why owners of vehicles would be prepared to pay more to secure the replacement of their vehicles but would pay little to ensure adequate compensation for victims of accidents.
According to him, when the premium paid per year for a 33-seater vehicle travelling from Accra to Kumasi is divided per day, the total premium is negligible.
With the new hikes, he said, drivers may be paying ¢1.30 per day. “How does that affect transport fares?” he asked.
He said those complaining about the hikes are the ones who drive recklessly and cause needless accidents in the country for insurance companies to pay huge claims to clients.
Mr Menyawovor stated that the hike in premiums will serve to increase the capacity of insurers to adequately compensate victims in the event of accidents.
For a breakdown of the new policy, annual premium for third-party insurance, for example, now costs GH¢471 for private cars, which prior to the review was at GH¢70, while that of taxis has been priced at GH¢576 per annum.
Commercial buses, also known as trotros, will also pay GH¢586 and motorcycles will also pay GH¢256 for insurance annually.
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