Comesa insurance scheme gains strength as trade takes off

By John OyukeThe Comesa cross border insurance scheme, Yellow Card, continues to grow, with the premium income standing at $5 million (Sh375m) this year.The 3rd party motor vehicle insurance instrument, meant to make the life of the business community easier, has grown two-fold in the last four years alone.The Comesa Secretariat put the number of cards issued to cross border motorists annually, at about 90,000 in 2009, up from 50,000 in 2005.The annual premium income has doubled from $2.5 million to $5 million during the same period.The number of claims made for compensation of road accident victims, rose from less than 80 claims in 2005, to 210 claims in 2009.Cut transactional costsComesa Secretary General, Sindiso Ngwenya, said the Yellow Card has increased competitiveness by reducing cross-border transport and cutting transaction costs, as it saves time and money to transporters and business communities in the region.An accident scene. Yellow card offers insurance for transporters and motorists travelling operating in the Comesa region. Above: An auto insurance policy. Photo: courtesyThese benefits, he added, in a statement to the 23rd Council meeting of the Yellow Card Bureau in Lusaka, Zambia, have been passed on to producers and consumers in the region.The Comesa Yellow Card is a motor vehicle insurance scheme, which is valid in all the participating countries. It covers third-party liabilities and medical expenses for the driver and passengers of an insured vehicle, should they suffer bodily injury as a result of an accident. It has also facilitates cross border movement of vehicles between Comesa member countries. Because it is valid in many parts of the region, transporters and motorists do not have to buy insurance cover at each border post they cross.For example, if a Kenyan motorist wishes to drive to Harare, Zimbabwe, he will purchase a Yellow Card from an insurance company in Kenya for the required period of time and covering the countries he will be travelling through. If, on his way to Zimbabwe, he is involved in an accident in Malawi, all the motorist will be required to do is to report to the Malawian Yellow Card National Bureau, which is the focal point (often an insurance company) representing all the insurance companies issuing Yellow Cards, and the traffic police. The National Bureau will then settle the claim arising from this accident. If the vehicle is in a roadworthy state, the motorist will be freed to continue his journey. The scheme is currently operational in Burundi, Democratic Republic of Congo, Eritrea, Ethiopia, Kenya, Malawi, Rwanda, Uganda, Tanzania, Zambia and Zimbabwe. About 150 insurance companies are involved in the operation of the scheme and issue about 50,000 cards annually.National bureauKenya Reinsurance Corporation (Kenya Re) will handle regional third party motor vehicle claims under the Yellow card scheme, as a regional national bureau.Kenya Re will obtain and supply Yellow Card books to member insurance companies, handling claims under the scheme and activities for the reinsurance pool of the scheme. It will also serve as the information bureau for all the various stakeholders and participants of the scheme.Should an accident occur in a foreign country within the COMESA region, the motorist is expected to report the matter to one of the Kenya Re branches, which are available in the member states for claims processing.The Yellow Card Scheme also provides emergency treatment expenses cover to travelling motorists and passengers, for a limited sum of indemnity.Trade experts describe the Yellow Card Scheme as an advanced regional card system with a reinsurance pool and clearing house facility, which makes the system efficient and profitable, when compared to similar systems in the Western and Northern Africa.The Yellow Card Bureau meeting also considered the progress report on the implementation of the Regional Customs Transit Guarantee (RCTG) Scheme, commonly known as RCTG CARNET. The CARNET, which was rolled out in the Northern Corridor serving Kenya, Uganda, Rwanda and Burundi on 15th September 2009, is envisaged to reduce between 15-20 per cent of the total cost of transport and transit for goods in transit in the region. Preparations are under way to commence operations in the Southern, Central and other corridors.

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Comesa insurance scheme gains strength as trade takes off

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