IT is very common in Zimbabwe for people to focus their attention on secondary issues whilst leaving the primary issues untouched. We recently witnessed a tragic accident that occurred along the highway linking Gweru andKwekwe and my heart goes out to all the families who were affected by this incident. Calls have been made to set up a ‘Road accident fund’ to compensate victims of future accidents of this magnitude. Indeed, accidents of such a magnitude occur, roughly 2 or 3 times a year here in Zimbabwe. While I appreciate the good intentions of such a venture, my personal opinion is that, this is basically reinventing the wheel – since we already have a capable insurance sector.
Before I go into detail about the underwriting capacity of our insurance industry, I would like to give you a brief foray into my world of risk management. Before one begins to talk about setting aside monies (risk financing) to counter the effects of road accidents, they need to first of all analyse how the accidents occur in the first place.This allows one to determine whether it is within our means to prevent them. After all, prevention is better than cure. It is much better to spend money to prevent road accidents than to save money to use in case of a road accident.
I admire the way in which airline accidents are investigated in the developed world. I have seen nearly every episode of Air crash investigation and it is astounding how they can track the demise of an airplane down to a single bolt and to the mechanic who was responsible for that bolt. Here in Zimbabwe however, we just list the cause of accident as; ‘over speeding’ and just leave it at that. Cars travel at 120km/hr every day but they do not veer off the road and start mowing down trees. I really wonder if a formal investigation was set up to see if the vehicle in question had a valid certificate of fitness. There are key questions that need answers here. Who issued the certificate of fitness, is it still valid today, and did the police on the countless road blocks ask to see the driver’s documentation papers, if the documentation was not valid/sufficient in terms of the law, why did they allow the bus to pass? Was there bribery involved? Did the bus have passenger insurance, if not, why was it allowed through to proceed on its journey?
All of these are valid questions that need answers before we can even talk about setting up a road accident fund. Not only do the families of the victims deserve to know, but imagine how many public transport vehicles out there are plying their routes with the same (unknown) mechanical problem(s) that caused the Gweru Kwekwe accident?
Our insurance industry has over US$170 million in assets that stand ready to shoulder risks such as road accidents. On top of that, there is another safety net in the form of reinsurance which has an additional US$130 million in assets. Our reinsurance companies even facilitate the transfer of huge risks such as aircraft accidents into the global reinsurance industry. Can someone tell me how long it will take for a road accident fund set up today, to attain such a scale? Moreover, there is a risk that any money set aside becomes a temptation for our cash strapped government. Who knows, the costs of administration of such a fund may be as high as 80% just like the government’s salary bill.Insurance companies are commercial ventures and therefore have an incentive to handle risks in the most cost efficient way possible.
I find it reprehensible that people are allowed to operate public transport vehicles without insurance and in the event that they are stopped by police, only made to pay a fine. Not having passenger insurance should be like not having fuel in the car and anyone found wanting should be made to park their car on the spot. Of course you will hear reports of people who say insurance does not work or that insurance companies refuse to pay out claims. These are usually isolated cases that happen when one purchases insurance from an ‘agent’ operating under a tree or an operator tries to claim accident benefits in situations where the bus was overloaded and passengers were seated on the engine (paKadoma). The fact of the matter is that we do not need a road accident fund.
Thomas Sithole is an Actuarial Analyst (Enterprise Risk Management) at Bluecroft Actuarial Solutions. Please refer to his corporate profile on this web address to contact him: thomas.bluecroftsolutions.com
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