Motor insurance sector loses $60m: 80 000 vehicles unregistered

15 Oct, 2020 - 00:10 0 Views
Motor insurance sector loses $60m: 80 000 vehicles unregistered Mr Tendai Karonga

The Chronicle

Patrick Chitumba, Midlands Bureau Chief
ABOUT 80 000 unregistered and uninsured vehicles are on the country’s roads, prejudicing the motor vehicle insurance sector of approximately $60 million.

According to the Vehicle Registration and Licensing Act, vehicles should be registered and always display their registration plates and numbers.

Temporary registration number plates normally have a 14-day lifespan, just enough time to get the vehicle home and organize the permanent registration.

Police recently launched a blitz targeting unregistered vehicles across the country, which has seen thousands of unregistered vehicles being impounded.

The outbreak of the Covid-19 pandemic has also adversely affected the performance of the Short-Term Insurance Sector in Zimbabwe, which includes motor vehicle insurance, Insurance Council of Zimbabwe CEO Mr Tendai Karonga, said.

He was addressing members of the media during a virtual Insurance and Pensions Commission (IPEC) and National Social Security Authority (NSSA) workshop Tuesday.

He said the performance of motor insurance was further affected by the Central Vehicle Registry’s (CVR) inability to register vehicles due to lack of financial resources to produce registration plates.

“This resulted in about 80 000 unregistered and uninsured vehicles on the roads leading to a loss of the mandatory Third-Party Motor premiums of approximately $60 million,” he said.

“Statistics are based on the CVR Registrar’s Report to the Parliamentary Transport Committee on 28 September 2020.”

Mr Karonga said the situation might persist as CVR has financial resources to provide plates for only 32 000 vehicles, leaving more than 48 000 unregistered.

He said as a result the insurance and banking operations were expected to decline by 7,1 percent in response to the pandemic by year end.

Mr Karonga said the motor insurance industry was one of the large classes of insurance, contributing 29,45 percent for the period January to June 2020 to the total Gross Premium Written (GPW) of the non-life insurance. In terms of real growth, Mr Karonga said the sector registered a decline of 33 percent compared to the same period in 2019.

“Third Party Motor insurance is the largest contributor of premiums to the motor insurance class. Data collection structures are being implemented to accurately record premium contributions of motor insurance sub-classes,” he said.

However, as a result of the Covid-19 lockdown, Mr Karonga said the level of traffic was greatly subdued in April 2020 when the lockdown restrictions were imposed.

He noted that the easing of restrictions on movement have gradually increased to an average of 64 percent and 36 percent for commercial and private traffic respectively.

“One of the insurance pools negatively affected by restricted regional cross-border traffic was the Motor Insurance Pool.

“As of August 2020, about 59 percent of budgeted premium was collected.

“In comparison to the same period in 2019, there was a decrease of 37 percent in premiums collected.,” he said.

Meanwhile, Mr Karonga said consumers of the fire insurance class contributed 29,03 percent to the total GPW for the period January to June 2020.

The segment registered a decline of -1,3 percent in terms of real growth compared to the same period in 2019.

The fire insurance class mostly covers corporates in the service and manufacturing sectors whose operations have been negatively affected by the persistent challenging economic climate coupled with the effects of the Covid-19 pandemic.

Mr Karonga said the engineering insurance business contributed 26,12 percent to the GPW for the period January to June 2020 and experienced an increase of 116 percent in real growth compared to the same period in 2019.

This was attributed to various national construction projects that are at different stages of completion such as the Beitbridge-Harare-Chirundu Highway and independent power stations among others.

While the agricultural sector is one of the major drivers of the economy, its consumption of insurance service is very minimal, contributing 1,45 percent to the GPW for the period January to June 2020, said Mr Karonga.

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