By Ali Darabo SULEIMAN
What some economists or human rights advocates like the Centre for Socio-Economic Policy and Anti-Corruption Governance, CESPAG, expect in the insurance industry is emerging but at a snail pace.
For some decades, third party motor insurance compensation for injured or dead persons or damaged properties belonging to third parties have not been satisfactory in many cases. Few of such cases ended up in the courtrooms. As for the verdicts, your guess is as good as mine is.
As at 2024, the standard or minimum limit of compensation payable to innocent third parties on behalf of the tortfeasors-faultingfaulting motorists) was Ghc6,000.00 for property damaged. Thus, innocent third parties are left to their fate once the damages to their properties are higher than the amount of compensation received from the insurance companies. Often, the tortfeasors plea the mercy of the third party as they are unable to restore the damage caused.
Good as it may be for both the Ghana Insurers’ Association and customers (motorists) to increase the minimum limit from Ghc6,000 to Ghc8,000 (i.e. 33.33% increase) with a 10% premium rise, CESPAG believes that the plight of the innocent third party largely remains under serious threat. It is said, “When two elephants fight, is the grass that suffers”.
Third party injury and death compensation were the focus of “The Motor Vehicle Third Party Insurance Act (1958)”. Section 3 of the Act says “no person shall use or cause or permit any other person to use, a motor vehicle unless there is in force a policy of insurance or such a security in respect of third-party risks.
In effect, either there is an effective insurance policy, or an amount of Two-Hundred Thousand Ghana Cedis (Ghc200,000) deposited with the Accountant General as security for Third-Party risks. Obviously, insurance policy provides the most convenient and affordable option under this Act.
CESPAG was somewhat taken aback when the hullabaloo on the recent premium increase was to enhance the third-party property damage liability since the existing limit of Ghc6000 is woefully inadequate. Although, this is a step in the right direction, it would have been prudent if the two parties (the Ghana Insurers’ Association and motorists) focus their discussions on how to pay adequate compensation on the lives of innocent injured third parties (including themselves and their families).
Before the promulgation of a document titled “Limits on motor injury and death claims guide by the Insurance Industry in 2019, compensations were unlimited just like done in other jurisdictions in the world. In 2019 the limit was capped at Ghc50,000 per life but has been reduced to Ghc30,000 per life as at today. Even though there is provision for special cases for higher compensation in the said document, the limits ought to be moving upwards instead of downwards.
Amazingly, the irony of this impasse is the absence of the opinion of the direct beneficiary, the third-party, whose right is being bargained in the contract of insurance. They are the voiceless end consumers whose opinion is always taken for granted in arriving at this contract.
They suffer the deficiency of these contracts if the law fails to respond in their favour. Additionally, insurers also occasionally bear the consequences of these interferences from buyers of insurance since the law will ensure insurers honour the rights of victims of road accidents as expected. Section 10 of the third-party Act emphasis the duty of insurers to satisfy judgements in favour of third parties unconditionally.
It may be unfair to squarely blame private insurance companies when the situation moves from bad to worse. Their hands are often tied down once they attempt to implement pragmatic financial measures that guarantee enough revenue for adequate compensation when they arise. Customers (motorists) focus on lower premiums whereas insurers also target good returns on investment.
However, it is time to redefine this approach to make the provision of third-party motor insurance more beneficial to the innocent third parties. Damage to property has other options to make it better; customers may increase their limits beyond the minimum. Again, insurance companies should begin to take subrogation or recoveries from tortfeasors seriously. If they do perhaps, it will push customers to buy adequate third-party property damage limits to secure their liability.
Finally, if an increase in insurance premium is needed to maintain a sustainable insurance industry that guarantees fair and adequate compensation to third parties, customers should kindly cooperate while insurers also find ways of rewarding customers (motorists) who have good claim records.
Ali Darabo is the Executive Director, CESPAG. Contact: 0246133141
