Poor track record muddies insurance

A decision to make insurance cover compulsory in the country has been given the green signal by the president. Can it be implemented? Kreshma Fakhri investigates.

A decision to make insurance cover compulsory in the country has been given the green signal by the president. Can it be implemented? Kreshma Fakhri investigates.
The department of insurance has decided to make mandatory accident insurance, vehicle including third party insurance, and insurance for employees.
This is in a country where only 20 percent of vehicles have any kind of insurance at all.
Fazal Bari Mumtaz, head of the Afghan Insurance Regulatory Authority, in the Ministry of Finance (MoF), acknowledges this will be an uphill task.
He says despite their sending letters on the issue to several government offices including the Ministry of Economy, provincial municipalities and governments, revenue directorates and other departments in the MoF, they have not received a single reply.
Mumtaz admits that “if government offices don’t act on the approved law that was approved by the council of ministers and signed by the president, it will face a serious problem.”
The fact is that vehicle owners who have paid for third party insurance, which was the only one available, have received no real benefits. Many complain in Kabul that the traffic department, which has to approve the claim for insurance, does not clear their requests.
Ahmad Wahid has been paying premium on a policy with the country’s only state-owned Afghan National Insurance Company for 11 years. He says he has sought accident damages several times but failed. “When we claim damages we are put to so much unnecessary trouble that it makes us feel nothing is worth this trouble,” he says.
Najibullah has a driving license issued in Kabul. He says it is mandatory to take insurance each time you apply for a license. But the traffic department neither gives a receipt nor issues a document to show a new insurance policy has been bought. As a result, he says, “the traffic department does not honour our claims for indemnity”. In his words, “No one cares. They take money from us. That is all.”
General Asadullah Khan, chief of the Kabul traffic department, says blithely insurance claims have to be made to the Afghan National Insurance Company. “We have no money to settle insurance claims,” he adds.
Saad Daud Mohmand, the head of Afghan National Insurance Company, says they are ready to pay damages to vehicle owners who are insured. He denies there are pending claims. In fact, no one has made claims, he says.
Mohmand blames the Kabul traffic department for the low insurance coverage in the country. He accuses the department of not referring a single person to the company since 2008.
Fazal Bari Mumtaz, head of the Afghan Insurance Regulatory Authority, quotes a 2012 survey to prove that new licenses are issued without the mandatory third party insurance. “Only 19 percent of cars had third party insurance according to the survey,” he says.
Mumtaz was of the opinion that the vehicle insurance net would grow only if there was coordination between the Kabul Traffic department and Afghan National Insurance Company.
Meanwhile, people wonder if the new law on mandatory insurance would work at all considering the staggering problems and people’s lack of faith. There is concern that it may be misused by corrupt officials who would take bribes to look the other way for non-implementation of the law.
Najibullah who lives in Kabul believes that “if the new kinds of insurance are like the third party vehicle insurance there will be no gain for people.”
Afghanistan has a total of 4 private insurance companies including Afghan Global Insurance Company and Insurance Group of Afghanistan.