Why commercial drivers hardly make motor insurance claims

Motor insurance is mandatory by law and also one of the most common and highly respected insurance policies in Ghana. Also known as vehicle/car/auto insurance, motor insurance is purchased for cars, trucks and other road vehicles.

Its primary objective is to provide protection against third-party liabilities that could also arise from the use of motor vehicles on public roads and physical damage resulting from traffic collisions.

Vehicle usage in general has embedded morbidity and mortality risk plus loss through theft and fire in several countries. In view of this, motor vehicle insurance was developed to take care of the possible loss that may arise from their use. Its primary introduction was to protect motorists from potential financial loss from operating a motor vehicle. 

This protection takes the form of equitable transfer of the risk of a loss from the vehicle user to the insurer in exchange for a premium and can be thought of as a guarantee for a loss or damage. 

In Ghana, the commonest forms of motor insurance are the Comprehensive Motor Insurance and Third Party Motor Insurance.

i. Comprehensive Motor Insurance: This covers accidental damage to vehicles, fire and theft of vehicles, malicious damage and act of God, among others. Typically, it covers all third-party liabilities, as well as own damage. The premium payable is usually a percentage between four and eight of the value of the vehicle and mostly with some discounts, depending on the usage and the driver’s track record.

Some of the factors used in determining the premium rates include the usage of the vehicle, the moral risk with respect to the driver using the vehicle and/or the frequency of usage of the vehicle. By way of illustration, the marketing manager of a company is more likely to be travelling around more frequently in the course of discharging his duties; therefore, his risk is higher than that of the back office manager who parks his vehicle from 8 a.m. to 5 p.m. and typically drives to and from work.

ii. Third Party Motor Insurance: This is the most commonly patronised insurance cover among vehicle owners and users. It is the cheaper form of motor insurance and mostly purchased by commercial vehicle owners and users because of the fear of the police. It provides cover for the third-party liabilities of the policy-holder and thereby compensates and indemnifies the third party or third parties accordingly.

It does not provide cover for own damage. This cover is also taken out by consumers with low value vehicles who want to protect themselves against damage to other road users. The premiums are typically very low compared to a comprehensive package. 

With this, one can be sure that the taxi or trotro driver at Achimota, Amakom, Apowa or Nungua or any other part of the country would want to go for this type of cover. The distribution channels are mainly at the DVLA offices where most general insurers have their agents or the head offices or regional branches of the insurance companies. While the agent is interested in high commissions on premiums paid, the driver or vehicle owner is only interested in what would take him or her along to satisfy the police.

They are not interested or rather feel that premiums are too high for comprehensive packages to protect their own vehicles or other vehicles and pedestrians; all they want is the minimum cover– third party! (The issue of not taking up comprehensive policies by commercial drivers would be brought to the fore in subsequent write-ups).

This category of vehicle users who really do not understand what motor insurance does is specifically trotro and taxi drivers in Ghana who are only concerned about having an insurance policy sticker only to satisfy the police. Finish! Thanks to the Motor Traffic and Transport Department (MTTD) of the Ghana Police Service for the strict enforcement of motor vehicle usage requirements. 

The typical taxi or trotro driver who runs into somebody’s expensive brand new saloon car is not likely to fall on his insurers for claims to be paid. He would rather rely heavily on two things; to go down on his knees and beg for forgiveness and to suggest the nearest mechanic shop where he could, in a few hours or days, get that brand new car fixed at his own cost. 

Speaking to a cross section of taxi and trotro drivers, it is clear that a certain percentage of them understand that even though their insurers could pay the claims by repairing the other person’s vehicle, they are afraid to go for police reports which sometimes take so long to obtain (reasons for such delays are obvious as they are sometimes requested to ‘do the do’ before they get the police reports) and this really frustrates them. Others who may be at fault or admit that they caused the accident are simply afraid of a possible detention if they should report the incident. 

There are yet still a good number who think that it is faster to ‘solve problems’ of third parties than going through all the ‘needless’ legal processes to have their vehicles fixed as that may be their only source of income and such long delays could have significant impact on their daily earnings.

It even becomes worse when they would have to go through another bureaucratic round of having the vehicle tested by the DVLA for its roadworthiness where they had to part with some coins on top of the waste of time.

Out of 8 commercial drivers I had personally spoken with, only one was confident to testify that his vehicle in its normal state would pass the roadworthy test if he has to go through the normal process! Three out of the number said “in order not to expose themselves,  they would not go to their insurers in the event of a claim unless death results to a third party”.     

Two of them who described insurance companies as ‘liars’ failed to give adequate proof, since the only reason for saying that is because that is what they have heard people say. Others say it is because of the fact that they are unable to read the policy terms and conditions.

It is not uncommon to see a trotro driver running to plead with victims for their negligence to let the matter rest there by making arrangements to fix the third party’s vehicle without recourse to his own insurers.

The beneficiary then becomes the insurance company. They certainly cannot be blamed for the insured’s failure to report an accident. 

Here again even though it is assumed that the policy certificates issued to motorists contain the terms and conditions, it is equally important that insurance  companies also recognise the fact that not all commercial drivers can read and write; therefore the need to provide a more detailed education at inception– this is where the agent at the DVLA office has a huge responsibility. This is perhaps one of the ways that would make the insuring public have some level of confidence and trust in the operations of the insurance industry.

There have also been issues relating to how long or rather the difficulties motorists have to go through before obtaining ‘a common police report’ from the various stations.

I want to believe strongly that if the issuing of police reports takes very little time, the taxi or trotro driver would rely heavily on insurance companies to take care of damage they cause to other vehicles and/or lives. 

I wish to conclude by reiterating the fact that while insurance companies have a huge responsibility of educating adequately on claims-making requirements at policy inceptions, the law enforcement agencies also have a responsibility to make the process of acquiring police reports in particular easier. 

The taxi or trotro driver also has the responsibility of ensuring that they go through due process in order to benefit from insurance, since insurance “is a promise to pay legitimate claims’ and insurers are ready to do just that. GB

The writer, an insurance practitioner with many years experience, is also the author of the article titled, ‘Ebola scare increases demand for insurance?, which appeared in last week’s edition.