Motor insurance to come with added benefits
Insurance companies are now adding value to motor vehicle cover products to curb huge losses under this category of business.
The companies hope the add-ons — which include road-side rescue, a personal accident cover and courtesy cars to use while waiting for vehicle repairs— will expand their market share besides improving the rate of recovery of lost vehicles.
Private motor insurance, which covers privately owned vehicles has the highest loss ratio in the entire industry.
Last year, this category suffered a loss ratio of 83.5 per cent, according to the Association of Kenya Insurers, which means that out of the total premiums received by the industry for this business, 83.5 per cent were paid back as claims.
The other category is the commercial motor vehicle which had the highest loss ratio of 57 per cent.
For many of the 38 insurance companies who underwrite these categories of business, they paid more claims than the premiums they had received — a big headache for an industry vulnerable to slight change in cash flow.
The industry cited low rate of recovery of stolen vehicles , among other challenges.
“The scenario we have is that the loss of private motor vehicles is high yet their recovery, especially for models like Toyota is almost zero,” said Kennedy Abinchia, the general manager of Amaco Insurance, one of the main players in this category of business.
Companies have also come up with motor insurance packages that allow owners to continue servicing loans they may have used to buy their vehicles in case it is in the garage or has been stolen awaiting compensation.
Others are offering free membership to the Automobile Association of Kenya.
The value addition has now extended to include tracking devices, a development seen as a major win for insurance companies because of the higher recovery rate of new technology tracking devices.
The news devices use a combination of GSM (Global System for Mobile communication), GPS (Global Positioning System), and GPRS (General packet radio service), all of which converge to give data on the vehicle owner’s phone.
Although no scientific research has been done on the effectiveness of this systems, their high effectiveness is seen in their ability to integrate with mobile phone and the internet through GoogleMap, such that the owners can be able to locate their vehicles using the map from any internet connected point.
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