Moam tussles with insurance companies on high premiums

Prime Insurance chief executive officer Albert Mbawala has differed with Minibus Owners Association of Malawi (Moam) secretary general Coxley Kamange that minibus owners should form their own insurance company because premiums for minibuses are high.

Kamange recently told the media that if insurance companies do not consider revising minibus insurance premiums, minibus operators would mobilise resources to start their own insurance company.

He said most minibus owners are complaining of high insurance premiums because they are eating into their profits and hence, the business is not viable.

But speaking in an interview in Lilongwe on Thursday, Mbawala said it is not true that minibus premiums are high but that insurance companies base their rates on the risk of the insured property.

Said Mbawala: “This issue has been there for a while, but to say that our rates are high is not true. Most accidents on our roads involve minibuses and as insurers, we have to base our premiums on the risks involved. This is why almost all insurance companies in the country shun minibus operators and only two take that huge risk.”

Mbawala, whose company insures many minibus operators, alleged that insurance companies are not happy handling minibus claims because most of them are suspicious.

“There was a time we wanted to increase our premiums for minibuses but government stopped us. That time, the Ministry of Transport (then headed by Ulemu Chilapondwa) advised us that the development would affect minibus operations and that operators might go on strike. We took heed of government’s advice despite that the Reserve Bank wanted us to raise the rates,” said Mbawala.

Chilapondwa confirmed having summoned Prime Insurance to a meeting on minibus rates, saying he did that to avoid an impending strike which was being mooted by minibus operators.

“Minibus operators had not been given ample notice on the impending premium increase and many operators were worried. The rates were meant to rise from around K200 000 to over K400 000 and as government, we had to come in as referees,” said Chilapondwa.

He said if Prime Insurance had given the operators ample time before raising rates, he would not have intervened.