PRESENTATION BY:
MRS. MARGARET IKONGO
MANAGING DIRECTOR
NATIONAL INSURANCE
CORPORATION OF TANZANIA
LIMITED.
REGIONAL WORKSHOP ON
PROMOTING RATIFICATION OF
BASEL PROTOCOL ON LIABILITY
AND COMPENSATION
FOR DAMAGES RESULTING FROM
TRANSBOUNDRY MOVEMENTS OF
HAZARDOUS WASTES
AND THEIR DISPOSAL
INTRODUCTION
1:0
Insurance is defined by the Oxford
English Dictionary as “The act of
securing the payment of a sum of
money in the event of loss or damage
to (property, Life, etc.) by payment of
(a) premium(s).
1:1
The basic methods
of Handling Risks
There are various risk management
tools used to carry out the
transformation of risks; these range
from:
 Insurance/Reinsurance;
 Risk pooling;
 Alternative Risk Transfer.
1:2
Role of Insurance
in Society
• Insurance is a risk transformation
mechanism. In day to day business
operations insurance is used as:
• Source of capital support;
• Risk Management tool;
• Provider of savings vehicles;
• Risk spreading.
….. Continued Role of
Insurance …..
Insurance business though has always been
“International” through spreading risks by
reinsurance rationalization and globalization
has also brought changing environments
within the industry
i. Competition from new players, products
which were traditionally sold by Insurance
companies are now being sold by different
players altogether such as Banks,
Supermarket and other retailers.
….. Continued
Role of Insurance …..
ii. Emergence of new risks and new
products. Traditional Insurance used to
cover accidental damage, theft, death
etc., today we are witnessing Insurance
cover available for:
 Weather interrupting a family holiday;
 Hole in one at a golf course;
 Contracting
 Disability, etc.
….. Continued
Role of Insurance …..
iii. Harmonization:
 Harmonization of rules and laws to meet
legislatives requirements.
iv. Insurance Industry like other financial
Institutions in many countries is subject to
statutory regulation.
2:0 COMESA YELLOW CARD
INSURANCE SCHEME
2:1
The main purpose of my
presentation:
COMESA Continued……
• Is to share experience on available regional
insurance scheme which is shared by
member countries under COMESA.
• The Common Market for Eastern and
Southern Africa (COMESA) is a regional
integration grouping of 20 African sovereign
states:-
COMESA
Continued …….
• Angola, Burundi, Comoros, Democratic
Republic of Congo, Djibouti, Egypt, Eritrea,
Ethiopia, Kenya, Madagascar, Malawi,
Mauritius, Namibia, Rwanda, Seychelles,
Sudan, Swaziland, Uganda, Zambia and
Zimbabwe, which have agreed to promote
regional integration through trade
development and the development their
natural and human resources for the mutual
benefit of all their people.
2:2
Regional Motor Vehicle
Insurance Scheme
(Yellow Card)
Development of trade involves among other
things movement of goods from one county to
another and the most common method is by
vehicles. Each country had its own third party
liability motor Insurance requirement.
Motorists crossing borders therefore had to
take fresh cover at each border. The Yellow
Card was developed to solve this problem.
The main objectives of
the Yellow Card Scheme
are to:
• Provide at least minimum guarantee, as those
required by the laws in force in the territories of the
parties to the Protocol, when the vehicles insured
are transiting the territories of other contracting
parties;
• Provide guarantee for road accident victims, fair
and prompt compensation for damage or injury
they may have sustained as a result of road traffic
accidents;
• Facilitate the smooth movement of vehicles
between member States;
Yellow Card
Continued……
• Encourage the greater movement of persons and
goods and promote the development of intraCOMESA trade and tourism; and
• Provide to the Insurance Industry, a simple and
economical mechanism to operate.
• The scheme has been operational for the past
fifteen years. Member countries that are party to
the Scheme are: Burundi, Democratic Republic of
Congo, Eritrea, Ethiopia, Kenya, Malawi, Rwanda,
Swaziland, Tanzania, Uganda, Zambia and
Zimbabwe.
2:3
Scheme Management
• The scheme is administrated by a network of
National Bureaux designated by each
member countries. A National Bureau is a
National focal point representing insurance
companies issuing Yellow Cards: Insurance
Companies authorised to underwrite motor
insurance business in the country. The
National Bureau is responsible for the
administration and control of the operations of
the Scheme in its own country.
Scheme Management
Continued ………
• The National Bureaux are
multilaterally committed through an
Inter-Bureaux Agreement and have
reciprocal arrangements among
themselves. In the sense that each
National Bureau has undertaken to
handle and settle claims on behalf of
member National Bureaux, which
arose from accidents involving visiting
motorists.
Scheme Management
Continued ………
• At a regional level, the National Bureaux
constitute a council of Bureaux. The
Council of Bureaux is the highest body to
co-ordinate and supervise the legal,
administrative and financial operations of
the National Bureaux and the Yellow Card
Scheme. The COMESA Secretariat is the
Interim Secretariat for the Council of
Bureaux.
Scheme Management
Continued ………
• The scheme has since been expanded to
cover property damage (which is not
covered by Insurance ordinance in some
member countries) and medical expense
for motorist and passengers should they
suffer bodily injury as result of an accident.
• One of the challenges is to harmonise the
laws and regulations of member countries
that govern the civil liability for motor
vehicle third party liability.
2:4
Performance in figures
• It is estimated that over 60,000
vehicles use Yellow Cards annually.
The number of companies issuing
Yellow Card is now over 160.
SUMMARY OF YELLOW CARDS ISSUED AN PREMIUMS
COLLECTED FOR THE PAST FIVE YEARS EFFECTIVE 1998
ITEM
NO.
YEAR
NO. OF YELLOW
PREMIUM COLLECTED IN
CARDS ISSUED
US DOLLAR
1
1998/99
29,423
968,089.00
2
1999/00
22,138
557,981.00
3
2000/01
28,767
938,737.00
4
2000/02
25,936
785,501.00
5
2002/03
38,477
1,712,517.00
TOTAL
144,741
4,962,825.00
2:5
• The scheme has its own pool which was
funded by members, each member
contributed USD.100,000.00, the pool
known as Yellow Card Reinsurance Pool
is managed by ZEP RE (PTA Reinsurance
Company) based in Nairobi.
3:0
BASEL PROTOCOL
ON LIABILITY
Article 14 (1)
• 1) The persons liable under Article 4 shall
establish and maintain during the period of
the time limit of liability, insurance, bonds or
other financial guarantees covering their
liability under Article 4 of the Protocol for
amounts not less than the minimum limits
specified in paragraph 2 of Annex B.
BASEL PROTOCOL
Continued ……..
• States may fulfill their obligation under this
paragraph by a declaration of selfinsurance. Nothing in this paragraph shall
prevent the use of deductibles or copayments as between the insurer and the
insured, but the failure of the insured to
pay any deductible or co-payment shall
not be a defence against the person who
has suffered the damage.
Damage means:
Article 2 (c )
2)
i.
Loss of life or personal injury;
ii. Loss of or damage to property other than
property held by the person liable in
accordance with the present Protocol;
iii. Loss of income directly deriving from an
economic interest in any use of the
environment, incur=red as a result of
impairment of the environment, taking into
account savings and costs;
Damage means:
Continued …….
iv. The costs of measures of reinstatement of the
impaired environment, limited to the costs of
measures actually taken or to be undertaken;
and
v. The costs of preventive measures, including
any loss or damage caused by such measures,
to the extent that the damage arises out of or
results from hazardous properties of the wastes
involved in the transboundary movement and
disposal of hazardous wastes and other wastes
subject to the Convention.
3:1
Insurance exclusion
• Risk required to be covered under the
protocol are in general exclusions under
Insurance contracts.
• It is indicated that Governments may
declare self insurance in order to meet the
requirement for Article 14. It is however,
noted that in many instances the “so called
self insurance fund” does not exist,
… this is mainly because Governments
respond after events and rely on
budgets, including diversion of
Resources from other project etc.
• It is therefore not possible or rather
difficult for self insurance to work.
4:0
CREATION OF POOL
4:1 Definition of a Pool
Combination of resources, funds to handle a
similar problem. Governments can react to
this requirement of the protocol by creating a
pool.
Definition of a Pool
Continued ……….
• Pools are created in most case to
address the issue of :• Insurance un-affordability
• Insurance un-availability
• Pools provide risk financing and
capacity.
4:2
Types of Pools
•
Pools can be funded or non-funded.
4:2:1
Funded Pools
Examples:-
i. AFRICA RE
Set up with limited liability by member countries
of the then Organization of Africa Unit (OAU).
ii. ZEP RE (PTA Reinsurance Company)
iii. ATI – African Trade Insurance Agency
Set up by World Bank fully funded credit to ATI
members to back up Insurance policies.
Provides cover for political risks, credit Insurance,
as well as non payment and Foreign Direct
Investment. The risks covered by ATI are not
available under normal insurance covers.
4:2:2
Non-Funded Pools
Examples:
i. Federation of African of Afro-Asian
Insurers and Reinsurers Aviation Pool.
ii. African oil and energy pool.
iii. African Aviation Pool
The aim of non-funded capacity is in many
cases to give each other protection and
business, normal a member company is
appointed to manage the pool.
4:2:3
Intergovernmental Risk
Pools
• Japan Pools known as (Kyousai) were formed in
the late 1940’s and continue to operate
successful. These are local government risk
financing.
• United States of America began to operate pools
in mid-1970’s. It is estimated that there are over
400 pools operating in the USA.
• Pools can also be found in Australia, Canada,
Netherlands.
4:2:4
The performance of most of the pools
show that pools are doing well and
achieving their objectives. Example of
few:-
African Oil and Energy
Pool: Capacity USD.
2.6 m.
GPW (USD)
2000
U/W Result Trading
Result
1,659,058
(298,180) (355,966)
2001
4,256,207
692,715
493,405
2002
5,640,472
856,409
610,474
African Aviation Pool:
Capacity USD. 3.4 m.
GPW (USD
U/W Result
Trading
Result
2000
2001
1,682,373
133,664
2,431,380 1,091,222
32,560
961,988
2002
3,356,115
600,241
884,251
5:0
RECOMMENDATION
• Since hazardous wastes are an
exclusion under traditional insurance
covers, the best approach would be
for the respective Governments to set
up a pool to handle such risks.
6:0
CONCLUSION
• I thank the workshop organizers for giving me an
opportunity to participate in this workshop.
• I hope I have been able to kick start a way forward which
will help promote this important protocol, more work will
have to be done if the workshop will decide on creation of
a pool as a solution.
• Let me share with you this statement which I came across
on GAPS IN INSURANCE COVERS. “There are many
problems associated with Insurance as it stands today.
Even without the impact of climate change, Insurance
poses a number of major problems.
CONCLUSION
Continued …. …….
• First, 80% of losses are not insured at all.
• Second, it represents a very inefficient process,
where 30% of funds collected are not recycled to
victims. This percentage is even higher in third
world countries.
• Third, Insurance is generally restricted to rich
people.
• Fourth, product design has resulted in short term,
restrictive products. This has negative
consequence for the rest of the Financial Industry.
• Finally, there is lack of capital with unstable prices
and volatile demands”.
REFERENCE:
• COMESA Yellow Card manuals.
• FAIR Review No. 132 June, 2004
• C.I.I. Insurance Research and Practise Vol.
16 January, 2001.
• UNEPFI – Finance, Environment and
sustainable Development European
Seminar.
Thank you for your
attention.
THE END