compulsory motor third party liability in mozambique

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  • Compulsory Third

    Party Insurance in

    Mozambique Presentation

    4 February 2016

    Presented by Henri Mittermayer

  • Compulsory Motor Third Party Liability Insurance

    Presentation Structure:

    I. Introduction brief history

    II. The Law nr. 2/2003, of 21 January

    III. Compulsory Insurance definition

    IV. Compulsory Motor Third Party Liability and the Insurance Law

    V. What is happening on the ground

    VI. Final notes/ comments

  • Compulsory Motor Third Party Liability Insurance

    I. Introduction brief history:

    In 1991, Mozambique changed from socialist to freemarket economy. mozambican parliament regulatedthat any insurance and reinsurance activity could beexplored by either public or private entities, as long asthose entities were duly licensed.

    The supervision of the insurance activity is under themandate of the Ministry of Finance -more specificalythe ISSM an entity subordinated to the Ministry ofFinance, which is responsible for the supervision of theInsurance activity in Mozambique.

  • Compulsory Motor Third Party Liability InsuranceIV. The Law nr. 2/2003, of 21 January:

    In terms of this law the motor third party liability insurance is compulsory in the Republic of Mozambique and,

    The transit on public roads of vehicles and trailerswithout the respective insurance cover obtained froman insurance company licensed in Mozambique is notallowed.

    This insurance covers the civil liability of people orentities responsible for patrimonial and non-patrimonialdamages caused to third parties as a consequence ofany road accidents

  • Compulsory Motor Third Party Liability Insurance

    II. Compulsory Insurance:

    Compulsory Insurance can be defined as any type of

    insurance an individual or business is legally required

    to buy. Compulsory insurance is mandatory for

    individuals and businesses that want to engage in

    certain financially risky activities, such as operating an

    automobile or operating a business with employees.

    In Mozambique the following insurance classes are

    compulsory:

    Motor third party liability insurance;

    Workman compensation insurance;

  • Compulsory Motor Third Party Liability Insurance

    III. Compulsory Motor Third Party Liability and the

    Insurance Law

    As per the Mozambican Insurance Law, all the

    compulsory insurance contracts in Mozambique must

    be governed by the laws of Mozambique.

    This is an exception to the general norm in terms of

    which, the parties entering into an insurance contract

    to cover risks located in Mozambique are free to chose

    the law to govern their contract.

  • Compulsory Motor Third Party Liability Insurance

    IV. The Law nr. 2/2003, of 21 January:

    The following were the key motivations for the approval and publication of this law:

    The growth of the road traffic in Mozambique, mainly inMaputo;

    The proliferation of vehicles in Mozambique without anyinsurance;

    A significant increase of road accidents, mainly the so calledHit and run.

  • Compulsory Motor Third Party Liability Insurance

    IV. The Law nr. 2/2003, of 21 January:

    Who should insure for third party liability?

    The owner of the vehicle or asset.

    Any person or institution with usufructuary rights to the vehicle or asset.

    Lessee, in case of leasing.

    if any other person contracts the insurance as requiredby the law, the legal obligation of the above mentionedpeople is considered as being complied with.

  • Compulsory Motor Third Party Liability Insurance

    IV. The Law nr. 2/2003, of 21 January:

    Minimum required sums Insured:

    300,000.00MZN

    20,000.00MZN maximum limit of indemnity to eachpassanger, for vehicles licensed for passanger transport(sum insured 20,000.00MZN x nr. Of allowedpassangers + 300,000.00MZN)

  • Compulsory Motor Third Party Liability Insurance

    IV. What is happening currently:

    Short Term Certificates Sold at the Border :

    What does the policy cover?

    The policy covers The Insured for any Third Party Liability that might be incurred in Mozambique caused by or in connection with any vehicle described in the certificate of insurance.

  • Compulsory Motor Third Party Liability Insurance

    IV. What is happening currently :

    Short Term Certificates Sold at the Border :

    The cover extends to both:

    Death or bodily injury to any third party, other than to a person employed by the Insured or arising from the course of employment or if the person is a member of the same household.

    Damage to all property, other than that property that belongs to the Insured.

  • Compulsory Motor Third Party Liability Insurance

    IV. What is happening currently:

    Short Term Certificates Sold at the Border:

    Why is it compulsory?

    Mozambique does not have an MVA Road Accident Fund - as in South Africa.

    In respect of foreign registered vehicles the Mozambican authorities need to be assured that if any liability is incurred by the use of such vehicles on their roads; there is a Mozambican Insurance Policy that is valid to cover liability costs.

  • Compulsory Motor Third Party Liability Insurance

    IV. What is happening currently :

    Short Term Certificates Sold at the Border :

    How long is the period of insurance?

    The certificate is valid for 30days from date of inception noted on the certificate or date of entry into Mozambique - Unless otherwise arranged with Insurer.

  • Compulsory Motor Third Party Liability Insurance

    IV. What is happening currently:

    Short Term Certificates Sold at the Border:

    What is the limit of liability?

    Unless otherwise stated in respect of any one occurrence Liability shall not exceed the limit of R1,000,000.00 (one million SA Rand)

  • Compulsory Motor Third Party Liability Insurance

    IV. What is happening currently :

    Short Term Certificates Sold at the Border:

    Pricing:

    Pricing is standard across all insurers .

  • Compulsory Motor Third Party Liability Insurance

    VI. Final notes:

    Risk Assessement and Fleet Managment.

    Underinsurance Risk to the transport company.

    Not a legal assistance policy !

    Managing the purchase of individual certificates.

    Consider : Alternative forms of purchase

    Annual cover / e-purchase.

  • Compulsory Motor Third Party Liability Insurance