By Favour Nnabugwu
Ghanaian insurance regulator, the National Insurance Commission (NIC), has implemented motor third-party liability insurance tariff hikes of around 43 percent that which all insurers are mandated to comply with effective January 1, 2023.
Given that the third-party liability insurance tariffs are a factor in determining comprehensive insurance premiums, vehicle owners also face an increase in motor comprehensive insurance premiums as well.
The Consumer Protection Agency (CPA) has strongly opposed the increases, Business Ghana. Mr Kofi Owusu , popularly known as Kofi Kapito, CPA chairman, says that the NIC failed to engage stakeholders in the sector to decide on the increments. According to him, there is no justification for the upward adjustment in insurance premiums.
He adds that “broader consultations were not done and would have reduced the amount that they are asking us to pay”. He called on the NIC to withhold the implementation of the tariff hikes and carry out proper consultation and education.
NIC says that the premium increases are aimed at safeguarding the financial health of motor insurance companies, so they can continue delivering value to customers.
In 2022, motor insurers in Ghana operated under difficult economic conditions. The costs of auto parts and materials, all imported, rose sharply during the year. Repair labour costs also surged due to the rising cost of living in the country.
In addition to increasing costs, insurers were confronted with significant losses in the value of investments. Typically, the returns on insurance company investments augment collected premiums for the settlement of claims. Losses on investments leave insurers in a difficult position with regard to their vital role in helping customers recover quickly from financial loss.
The new motor insurance tariff system for 2023 categorises vehicles into two groups based on the year of registration:
Group A: vehicles registered before 2020
Group B: vehicles registered from 2020 onwards
How much a vehicle owner pays as a premium depends on which group his vehicle falls in. Tariffs for Group A are lower than those for Group B. Previously, all private cars used for social and private commuting purposes paid the same tariff rate.