Radar | Aug 06,2022
The Insurance Fund Administration Service (IFAS) is set to introduce a new arrangement at the end of 2021, compelling health institutions to treat those injured in road accidents for up to 40,000 Br. As it stands, health facilities provide emergency treatment costing up to 2,000 Br as part of the third-party motor insurance policy while victims are expected to cover additional expenses or wait for claim compensation from insurance companies to cover costs up to 40,000 Br.
The Fund pays compensation for accidents that occurred by uninsured vehicles or if the injury involves hit-and-run crime. Last year, IFAS paid one million Birr to health institutions and 38 victims as compensation for injury, death and property damage.
“Many aren't getting the medical attention they need because the costs are beyond the limit specified by law,” said Adel Abdulahi, head of operations at IFAS.
However, administrators of health institutions are unhappy collecting compensations from insurance companies, and the IFAS can take considerable time.
Teklehaimanot General Hospital is yet to be paid for the services it provided last year, according to its representative, who attended a consultative meeting IFAS officials held on Wednesday, November 10, 2021, at the Capital Hotel on Haile Gebreselassie Avenue.
Health institutions and victims receive compensation from insurance companies when injuries are caused by vehicles insured. Insurance firms pay within a few days of claims filed before their agents, supported by doctors' notes, according to Abraham Mersha, deputy CEO of Nib Insurance.
Last year, 18 insurance companies collected 855 million Br in premiums from third-party policies while paying out half a billion Birr in claims. Executives of insurance firms blame the "insufficient" premium rates applicable to the industry for the loss ratio for the third-party policy that reaches 100pc.
Officials of the IFAS are revising the premium rates, with recommendations to amend the proclamation that governs third-party insurance policy, people familiar with the process disclosed to Fortune. If it passes, the amendment will be the first since a proclamation was enacted nine years ago. The annual premium rates range between 188 Br and 2,700 Br depending on the type of vehicle, and the amount of compensation for death or injury stands at 40,000 Br. In damage to property, compensation can reach up to 100,000 Br.
Although the adjustment is expected to significantly raise compensations and premium rates, officials say nothing is certain until the financial cost of risk and uncertainty is analysed. Two consulting firms are bidding to win the contract to study the options for revising premiums and compensations.
The new arrangement will also be part of the amendment, Adel disclosed.
PUBLISHED ON
Nov 13,2021 [ VOL
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