The hike in motor insurance premiums introduced in January 2018 are beginning to pay off as profits for the insurance industry flood in.
In its latest report, the National Bank of Rwanda’s Financial Stability Committee said Monday in Kigali that insurance firms earned profit of Rwf 9.3bn, up from Rwf 7.2bn during the previous quarter.
In other words, profits for the sector grew by 29.1% for the period ending March.
The sector profits rose due to the “improved performance of the motor insurance product, as well as the uptick of investment income”, said Central Bank Governor John Rwangombwa.
Amid persistent cries from the Association of Insurers (ASSAR), government agreed to review motor insurance – considered some of the lowest in region.
The firms said they were finding it had to cover payments since rates paid by clients were very low.
In January 2018, the association increased insurance premiums by up to 73 percent for private and public vehicles.
There was fierce public outcry. The association backed down, and agreed to increase in two phases at 60 per cent and 40 per cent.
The last 40 per cent increment was supposed to take effect in January this year. However, the Central Bank said in February that it had commissioned a fresh study before deciding on the modalities of the final increase.
But even with the first rise in premium, the insurance firms are already seeing good results.
It remains to be seen if Government will indeed allow for further increments.