In a circular sent out to short-term insurers, the Insurance Council of Zimbabwe advised of the upward review of statutory motor insurance premiums in response to inflation and exchange rates movement. The premiums were last reviewed in July 2021.
The review is not related to the ZINARA license fees as stated in some quarters.
With effect from 25 January 2022 the annual Road Traffic Act (RTA) cover premium for private cars will be ZWL9,810 and the quarterly premium will be ZWL3,270 up from the July 2021 rates of ZWL7,695 and ZWL2,565 respectively.
The statutory motor third party policy premiums and compensation limits denominated in USD are regulated through Statutory Instrument 293 – 2020 of the Road Traffic Act.
The limits are converted to ZWL and periodically reviewed in line with inflation and exchange rates. Policyholders have an option to pay premiums in USD or ZWL.
The reviews are necessary to ensure adequate compensation of third parties in the event of a claim.
The current review resulted in an increase in compensation limits from ZWL171,000 for RTA and ZWL855,000 for Full Third Party in July 2021 to ZWL218,000 and ZWL1,090,000 respectively effective January 2022.
The stated limits relate to property damage, bodily harm and death. The statutory policy also provides compensation for medical and funeral expenses.
The adjustment was justified as a necessity to hedge insurers against sub-economic premium rates that will result in operational losses as well as the inability to compensate victims adequately and timeously.
While most motorists have the statutory motor insurance cover, ICZ is encouraging the use of the comprehensive insurance policy which provides cover for both the policyholder and third parties at higher compensation limits.
The statutory motor policy provides benefit for third parties only.