News / National
Regulator rejects road accident fund
15 Mar 2018 at 13:14hrs | Views
THE Insurance and Pensions Commission (IPEC) has rejected calls for a fund to cater for accident victims.
Mooted by government in 2016 after it emerged that an accident occurs every 15 minutes and five people are killed daily on the country's roads, the fund was envisaged to assist victims and their families to pay for medical and burial expenses.
IPEC commissioner Tendai Karonga said it would be imprudent to burden taxpayers with more obligations to capacitate the fund.
"A road accident fund is not suitable," he told journalists at an insurance reporting seminar in Harare last week.
Karonga noted that third party insurance was ideal for Zimbabwe because it provided cover if a licensed driver was involved in an accident and was at fault.
It covers accidents that result in deaths or bodily injury to any person, destruction or damage to property.
Currently, third party insurance is mandatory in terms of the Road Traffic Act, which is administered by the Ministry of Transport and Infrastructure Development.
"South Africa and other regional countries with road accident funds are consistently making losses, and it won't make sense for us to implement something that will result in the public being taxed more," Karonga said.
South Africa, Botswana, Namibia and Botswana finance their accident funds from fuel levies.
The South African Treasury last month said its road accident fund ― which compensates victims of road accidents for losses and damages ― was a drain on social security funds.
South Africa's Treasury said the fund's liabilities were expected to grow from R189,2 billion ($15,99 billion) in 2016/17 to R355,3 billion ($30 billion) in 2020/21, while its assets growth base would remain largely flat.
Karonga's pronouncement comes after IPEC recently advised government against setting up the fund because this would erode $71 million of short-term insurers' income from third party business and result in at least eight companies collapsing.
"Third party motor insurance, which is predominantly structured around the road accident fund, recorded total premiums amounting to $71,38 million for the period May 1, 2016 to April 30, 2017. Premium generated from third party policies contributed 32,8 percent of gross premium, while 42,86 percent of total premium is attributable to all types of motor insurance, including third party insurance," IPEC said in a recent submission to government.
Short-term insurers recorded gross premium written of $271 million in the second quarter of 2017.
According to the commission, funding challenges, cost of technical expertise, governance issues, road accident fund monopoly and duplication of roles are among the reasons why government should not set up the fund.
Mooted by government in 2016 after it emerged that an accident occurs every 15 minutes and five people are killed daily on the country's roads, the fund was envisaged to assist victims and their families to pay for medical and burial expenses.
IPEC commissioner Tendai Karonga said it would be imprudent to burden taxpayers with more obligations to capacitate the fund.
"A road accident fund is not suitable," he told journalists at an insurance reporting seminar in Harare last week.
Karonga noted that third party insurance was ideal for Zimbabwe because it provided cover if a licensed driver was involved in an accident and was at fault.
It covers accidents that result in deaths or bodily injury to any person, destruction or damage to property.
Currently, third party insurance is mandatory in terms of the Road Traffic Act, which is administered by the Ministry of Transport and Infrastructure Development.
South Africa, Botswana, Namibia and Botswana finance their accident funds from fuel levies.
The South African Treasury last month said its road accident fund ― which compensates victims of road accidents for losses and damages ― was a drain on social security funds.
South Africa's Treasury said the fund's liabilities were expected to grow from R189,2 billion ($15,99 billion) in 2016/17 to R355,3 billion ($30 billion) in 2020/21, while its assets growth base would remain largely flat.
Karonga's pronouncement comes after IPEC recently advised government against setting up the fund because this would erode $71 million of short-term insurers' income from third party business and result in at least eight companies collapsing.
"Third party motor insurance, which is predominantly structured around the road accident fund, recorded total premiums amounting to $71,38 million for the period May 1, 2016 to April 30, 2017. Premium generated from third party policies contributed 32,8 percent of gross premium, while 42,86 percent of total premium is attributable to all types of motor insurance, including third party insurance," IPEC said in a recent submission to government.
Short-term insurers recorded gross premium written of $271 million in the second quarter of 2017.
According to the commission, funding challenges, cost of technical expertise, governance issues, road accident fund monopoly and duplication of roles are among the reasons why government should not set up the fund.
Source - fingaz
