Insurance companies urge govt to fix minimum wage

Saturday August 27 2022

A man files an insurance claim at the Rwanda Social Security Board offices. PHOTO | NMG


Insurers are up in arms over what they termed delays by the government in fixing minimum wage.

Industry players said lack of minimum wage that provides the benchmark for calculating compensation in case of injury or death is affecting insurance companies.

Lack of minimum wage means that insurers have to pay Rwf3,000 per day for fatality case and incapacitating injury for victims without a stipulated salary.

“Any compensation calculation starts with a minimum wage and lack of it has exposed us to untold losses, we also still have issues of doctors who come up with very high invalidity rates” said Alex Bahizi, chief executive of BK general insurance.

“In this market there is no limit to the number of beneficiaries to be compensated like in neighbouring countries like Uganda or Kenya, even if the person had 15 children they all have to be compensated, it even extends to siblings,” he said.

In case of a fatality, depending on how much the person was earning as salary, the next of kin mostly spouse is given a 100 percent lump sum of the salary the deceased was to earn until he or she is 65 years.


The children and parents are supposed to be compensated by 75 percent while
siblings are given up to 50 percent each.

“There is no limit on liability and these issues compound motor, making it unprofitable, all these issues can only be addressed by law,

"We have presented these issues to the relevant authorities, including workers unions and they seem to understand our problem, the Ministry of Finance said the law is with law reform commission, we are still waiting,” said Mr Bahizi.

He said motorcycle insurance is loss-making as the insuarers have to incur repair cost, medical fees for rider and passenger. He shares the concerns about motor insurance with Betty Sayinzoga, the CEO of Sanlam, who said something has to be urgently done.

“Motor insurance is killing us, there is nothing we can do on our own to make the class perform better, a new law revising the existing compensation regime is what can salvage motor,” Ms Sayinzoga said.

In 2018, insurance companies unanimously increased motor insurance premiums by up to 73 percent causing an outcry in the market.

The mandatory third party insurance policy was increased to 73 per cent, while the comprehensive package went up to 4.5 per cent.