The Insurance Regulatory Authority (IRA) has come up with new motor insurance rates guideline applicable to the whole insurance industry. The rates are effective from 1st March 2010 ie for all new motor insurance business and for all motor insurances covers coming up for renewal. The most notable change in the guideline is the re-introduction of the NO CLAIM DISCOUNT to reward accident free drivers in addition to the upward revision of the basic motor rates. The No Claims Discount is an arrangement where accident free drivers are rewarded by discounting the premium at each renewal by 10% increasing to a maximum of 50% after 5 years claims free period for individual private car vehicles and 30% maximum for commercial vehicles after 3 years period.
The premium rate for Private car (Individual) has been set at 7.5% of sum insured. A No Claim Discount will be allowed on this rate each year. The minimum premium rate net of all discounts under this class of insurance will be 3.8% of the sum insured subject to a minimum premium of Kshs. 15,000.
The premium rate for Private car (Fleet) has been set at 7% of sum insured. Discount on this class will be allowed depending on the loss ratio. The minimum premium rate net of all discounts will be 3.5% of sum insured subject to a minimum premium of Kshs. 15,000.
The premium rate for Motor commercial-own goods (non-fleet)) has been set at 7% of sum insured. A No Claim Discount will be allowed on this rate each year. The minimum premium rate under this class of insurance will be 5% of the sum insured subject to a minimum premium of Kshs. 15,000.
The premium rate for Motor Commercial – own goods (Fleet) has been set at 6.5% of sum insured. Discount on this class will be allowed depending on the loss ratio. The minimum premium rate will be 4.5% of sum insured subject to a minimum premium of Kshs. 15,000.
Vehicles with accident free record will be entitled to No Claims Discount, when they migrate to the new rating structure at the renewal date.The discount will vary depending on individual claims record.
The New Rates are mandatory for the whole insurance industry and heavy penalties are being imposed by the Insurance Regulatory Authority to Insurance Brokers and Insurance Companies for non-compliance .The penalties include heavy fines and threat to suspend trading licenses.
It will be interesting to see whether these rates will hold in the long run but currently all the insurances companies are studiously implementing them.
In the whole of this process, as your insurance brokers we will always safeguard your interest. Please do not hesitate to contact us for any clarification and/or additional information.
Thank you for your continued business support.
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