Insurance companies hesitant to insure motorcycle taxis

Insurance companies hesitant to insure motorcycle taxis

Insurers are not providing new products for motorcycle taxi owners.

This is because of the increasing number of accidents.  Last month, the government required that all motorcycle taxis have to be insured, the riders must wear helmets, drivers must have a valid license and standard fare rates are a necessity.

Despite the new reforms, insurance companies have excluded motorcycle coverage.  Insurers say it is because there has been a high loss ratio regarding theft and accidents.  The losses are significantly higher than it is for private vehicles.

According to the Economic Survey in 2010, there were only 3,759 registered motorcycles in 2005, increasing to 91,151 in 2009.  This was credited to the government’s decision to have a zero-rate duty for all motorcycles that were below 250cc.

Also during that time frame, there were about 140 motorcycle taxi drivers killed in Kenya and 837 other that were seriously hurt.  Additionally, 577 passengers were killed and 7,676 were seriously hurt.  In Kenya, motorcycles and tuk tuks (three wheelers) are competing for space on the highways with vehicles because there are no lanes for them.  This leaves the motorcyclist unprotected and they could get injured or even die.

Mr. Obincha said, “Most motorcycle owners have no other assets and seek compensation on the spot.”  Insurers have increased premiums by 50% annually for motorcycles.  The comprehensive insurance coverage has increased from Sh5,000 last year to approximately Sh7,500 this year.

Other companies are insuring them as a fleet so they can spread out the risk to keep the cost down.  Mary Kilonzo of Chartis Insurance said that they do not offer coverage for individual motorcycles. They are only covered if they are part of a fleet. Kilonzo does not foresee that they will provide this coverage in the near future either.

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