PRACTICES AND CHALLENGES IN IMPLEMENTING COMPULSORY MOTOR THIRD PARTY LIABILITY (MTPL) INSURANCE IN ETHIOPIA

Abstract

In Ethiopia Proclamation no 559/2008 (repealed by no 799/2013) was enacted with primary objective of providing limited but guaranteed compensation and providing emergency medical treatment to all victims of vehicle accident in Ethiopia. The purpose of this study is to assess the Practices and Challenges in Implementing Compulsory Motor Third Party Liability Insurance (MTPL) in Ethiopia; with special reference to relevant liability laws of Ethiopia and claims handling procedure and practices in the market. Exploratory and qualitative research was employed. The methodology employed for undertaking this research includes comprehensive literature review, questionnaires, interviews etc in order to receive sufficient information. Accordingly, the research is based on self-administered questionnaires to 200 targeted customers who are members of owners of public transport vehicles associations, by using multi stage sampling technique. Fifteen additional respondents were selected for interview; from insurance companies and Insurance Fund Administration Agency (IFAA) management members; through purposive non-random sampling technique to obtain expert opinions. The data obtained from customers were analyzed by using SPSS Ver. 20 and Excel. Main queries forwarded to respondents to receive agreement or otherwise were: the existing provisions of respective liability laws of Ethiopia are comprehensible and detailed to ensure fair and equitable compensation; there is transparent and fair claims handling process or procedure; there is defined service standard and processing time in delivering insurance service; employees delivering the service are competent and adequate supervision and complaint management system is in place; all intended to ensure effective and efficient implementation of Vehicle Insurance Against Third Party Risks Proclamation and achievement of its objective. Accordingly seven out of ten respondents disagreed to these statements; with only about two agreeing and rest one out of ten being indifferent. Since this law has a total marking of social insurance scheme, recommendable solution to this magnitude of discontented and disfranchised customers who lacked to receive at least minimum standard service call for radical change by issuing detailed legal framework with optional structured compensation settlement plan; claims management guideline with minimum service standard and processing time for each activity; and compulsory introduction of effective customer service and independent referee or ombudsman.