Do not overcharge Boda Boda operators insurance premiums, IRA Warns underwriters

The Insurance Regulatory Authority (IRA) will probe how underwriters offering insurance products to boda boda operators set their premiums, to stop the riders from being overcharged.

The regulator has also advised boda boda riders to demand license documentation issued by IRA from insurance agents and brokers before paying for premiums, warning that some errant brokers were not remitting payments to insurers, which exposed the insured to misery should the risks occur.

Making a presentation during a forum held in Nakuru and aimed at educating boda boda operators on the nature of insurance products, contracts, as well the policy holders’ rights and obligations, head of IRA Corporate Communications team, Ms Noella Mutanda, asked brokers to focus on earning their commissions and spend less time on collecting the premiums on behalf of insurance companies.

Ms Mutanda noted that while several underwriters have third party insurance policy products, uptake remains minimal as boda boda operators see it as an unnecessary cost.

She added, “IRA has rolled out countrywide campaigns aimed at changing operators’ and clients’ attitude towards the boda-boda industry by acknowledging that the sector is an important part of our economy and impacts each one of us in one way or the other,”.

The official stated that though it was an activity which provides a livelihood for close to five million of citizens who would otherwise be engaged in less honorable occupations most of them do not possess driving licenses, insurance cover or protective riding gear.

To restore sanity in the sector, the riders, she observed require to be trained and tested to qualify for a driving license, wear the minimum protective clothing, obtain insurance cover, obey traffic rules and laws specific to commercial motorcycles.

The sensitization program by the IRA comes against the background of the National Treasury in April, proposing changes to the Insurance Act that will make it illegal for motorcyclists and tuk-tuk operators, to operate without cover for their passengers and other road users.

Treasury Cabinet Secretary, Ukur Yatani, said the inclusion of fare-paying motorcycles under compulsory third cover insurance has been prompted by the rising number of accidents that have left many dead or injured and unable to foot hefty bills.

Currently, there is no requirement for the emerging public transport sector to take insurance for passengers.

“Owners of motorcycles do not have insurance covers to cater for any treatment in case of injuries or compensation in case of death or any other damages caused by an accident involving motorcycles,” Mr. Yatani said in April while presenting the 2022/23 budget.

“I propose to amend the Insurance Regulations to require motorcycles and three-wheelers used by fare-paying passengers to take insurance for their passengers,”

Ms Mutanda said the IRA was also encouraging the formation of savings and credit Co-operative Organizations (Saccos) by boda-boda operators, the benefits of which would be to provide a measure of self-regulation on one hand and access to credit on the other.

“At the moment most riders do not own the commercial motorcycles, they ride those which belong to other parties who have employed them on a retainer basis. If the riders were able to own the motorcycles, they would then become real stakeholders in the business and likely this would encourage them to be more responsible. This way they would also be able to afford insurance cover and appropriate protective gear,” the official pointed out.

Boda bodas have gained popularity over the years due to their ability to avoid traffic snarl-ups in urban centres and offer relatively lower fares compared to other means of public service transport.

Data from the Kenya National Bureau of Statistics shows annual motorcycle registrations more than doubled over the past five years to stand at 252,601 last year compared to 123,539 in 2016.

Motorcycles are fairly cheap, retailing at between Sh65,000 and Sh130,000, thus enabling many young people to acquire them for business.

This is the second time in less than three years that the Treasury is pushing for compulsory third cover insurance for boda bodas and tuk tuks.

Ms Mutanda explained that premiums charged to boda boda operators should be based on a rating process whose main objective is to enable the insurer to collect premiums that would enable it to meet its business expenses and earn some profit.

General insurers are however heavily influenced by market forces that recently saw a section of those offering private motor vehicle covers, for instance, move to hike premiums by 50 percent without taking into account different customer risk profiles.

“It is important that the general insurance market works well and delivers good outcomes for all consumers. We need to protect Kenyans. When you jump onto that boda boda, you need to be sure that the least it has is third-party cover,” she noted.

Currently, motorcycles and three-wheelers used for non-public services like social, domestic and leisure purposes are mandated to acquire third party insurance.

The insurance regulator says the inclusion of fare-paying motorcycles has been prompted by the rising number of accidents that have left many injured and unable to foot hefty bills.

The new directive is set to bring in a new business line for insurance companies who will provide cover for the nearly 1.5 million motorcycles plying various routes in the country.

In 2019, Parliament rejected the Treasury’s push for compulsory third-party insurance cover for boda bodas and tuktuks, citing lack of public participation in the changes.

Insurers’ lobby, Association of Kenya Insurers (AKI), had backed the proposals, arguing they will boost the confidence of millions of Kenyans who use boda bodas and tuktuks and other road users.



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