Assessment of the Motor Third Party Compulsory Insurance Practices and Challenges: the case of selected Insurance Companies in Ethiopia
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Date
2017-06
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Addis Ababa University
Abstract
Rarely a week goes by without a motor accident featuring in the national press, often as
headline news. Some of these are considered newsworthy simply due to unusual
circumstances and can be quite minor, whilst others are tragic events involving death
and serious injury and loss of property. The Ethiopian Government promulgated Motor
Third Party Compulsory Insurance (MTPCI) law under proclamation 559/2008 with the
aim of laying down a mechanism to alleviate economic loss as a result of road accident.
The MTPCI in Ethiopia came into effect on 11th September 2011. The proclamation was
revised after two years in service by Proclamation No. 799/2013. This paper tried to
assess the practice and implementation of the legislation with insurance companies and
IFAA. In order to address the research problem, both quantitative and qualitative
research approaches were used and also considered both primary and secondary data.
From the findings it was observed that the performance of MTPCI with both insurers and
IFAA was very profitable but not well understood. The tariff premium collected by IFAA
was found to be at high side compared against the payouts for hit & run and medical
expenses. The EMT case was not as smooth as required and its performance was still far
behind schedule. Moreover, according to the finding, there had been many operational
disparities with companies including but not limited to declining both cover and claim.
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Motor Third Party