The Dar es Salaam port
The move according to transporters will give them no option but to increase transportation costs and automatically scare away customers from neighboring countries who may be forced to alternate for other ports which have been eyeing the lucrative business by the Dar port.
A week long survey by the Guardian indicates that insurance companies in the country have entered into an agreement where they have raised the motor insurance costs uniformly contrary to Section 9.-(1) a of the Fair Competition Act of 2003.
Section 9 (1) a of the Fair Competition Act of 2003 reads ‘ A person shall not make or give effect to an agreement if the object, effect or likely effect of the agreement is price fixing between competitors.
The premium prices which became operational from July 1st this year indicate that owners of wheels up to 5 tons will be required to cough 200,000/- from the previously 120,000/- for a third party cover which is a raise of 80,000/-
As for people with private cars, the costs of a third party cover has shot from the previously 60,000/- to 100,000/-, a hike of 40,000/- shillings.
The hike has not spared oil tankers who are now required to cough 750,000/- from the previously 350,000/-third part premium respectively.
The Guardian managed to talk to one of the senior officials of the Tanzania Truck Owners (TATOA) who admitted that the hike will mostly likely increase business costs and will affect all.
The official who preferred anonymity on account that the spokesperson should be the one to reveal this issue, motor insurance costs have really escalated and this makes one wonder how much truck owners will charge clients to compensate for the running costs while on transit to send cargo to its destination.
“I am afraid the situation may leave us with no option but to raise transportation costs of cargo to Rwanda, Burundi and Zambia. This will have adverse effects as clients from neighboring countries will most likely alternate for other ports where there are cheaper costs such as Beira and Mombasa,” said the official.
He said raising motor insurance costs will not curb road accident but rather a research to find the root cause.
Recently the vice chairman of TATOA, Ms. Angellina Ngalula was quoted as saying that, the increase would not only hinder the competitive edge of Tanzanian companies against their competitors from other countries but also affect the final consumer by increasing cost of goods.
She said the new rates are too high as they have accelerated from 1.5 percent and 2 percent to 8 percent per truck.
Mgalula urged TIRA to cease using new rates starting July as announced, and return to the table to discuss the matter for the betterment of the whole nation, and our economy.
He said TATOA may be forced to use other means such as going to court and boycotting the new rates, which we are sure will disrupt the economy for interests and greediness of few people” said Ms. Ngalula.
TATOA also warned the matter would lead to formation of black markets of insurance companies, thus called for the government and TIRA to return to the table and resolve the matter according to the governing laws of the country.
Addressing reporters at the press conference at their offices in Dar es Salaam, Board member and spokesperson for the association, Mr. Elias Lukumay, said their effort to meet with Tanzania Insurance Regulatory Authority to discuss the matter has proved futile after the latter failed to respond to official letters and inquires from TATOA.
“On February we met with TIRA to have discussions on how to solve the matter, but since then we have not heard from them, and surprisingly, they have proceeded to announce the new insurance rates,” said Lukumay.
He said in their initial meeting with TIRA in February, they had agreed, under the stewardship of TIRA chairman that TIRA should convene a meeting between ATI and TIBA, to establish the cause of the misunderstanding before proceeding to call other stakeholders and the public for further discussion.
“This is a free market, and we believe that it should be able to regulate itself rather than creating a base rate, which has increased the insurance cost to 400 percent,” insisted Mr. Lukumay.
A senior official at the Fair Competition Commission who however did not want his name disclosed on account that he is not the spokesperson confirmed of being aware of the hike saying the commission was still investigating the matter.
“Investigation matters are discreet and they are some lines that the media can not cross as if you do so you will jeopardize the whole process,” said the official while promising to call this reporter once the investigation is through.
An insurance broker in Dar es Salaam who prefers anonymity admits that the raise has already jeopardized business as clients are slowly shunning away.
“Most Insurance Companies are run by foreigners while as Tanzanians are merely brokers in the business. The rise means that all the money will be exported as at the end of the day they enjoy the meager share of the cake which is 99 percent leaving us with only 1 percent respectively,” lamented the broker.
The Commissioner of Insurance, Israel Kamuzora, was recently quoted as saying that the proposed premiums aim at creating stability in the industry by curbing abuses such as premium undercutting by some companies.
Stakeholders in transport including Tanzania Truck Owners Association (TATOA) were recently reported to have objected to the new insurance rates, arguing it was foreign influenced and as such will have a great impact on the sector and result into hiked food prices.
TATOA board member Elias Lukumay said this during a media briefing on the proposed insurance rates set by Tanzania Insurance Regulatory Authority (TIRA).
He said the new rates are too high as they have accelerated from 1.5 percent and 2 percent to 8 percent per truck.
Lukumay said stakeholders want the Tanzania Insurance Brokers Association (TIBA) and Association of Tanzania Insurers (ATI) to negotiate on the matter with TIRA for the sake of Tanzanians and the transport sector.
For his part, President of the Tanzania Insurance Brokers Association (TIBA), Dr Sebastian Ndege, was quoted as saying that his association does not support the proposals in their totality on account that they were not involved in its formulation.
“We don’t agree with everything in their proposals, as brokers we consider the welfare of the industry and the consumers as well,” Dr Ndege said.
SOURCE:
THE GUARDIAN
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