The Implementation Of Compulsory Motor Insurance In Ethiopia

The economic and social damage due to motor vehicle is escalating alarmingly. Amongrnothers, one of the measure took by the government of Ethiopia is the recent development ofrnlegislation “Vehicle Insurance Against Third Party Risks Proclamation”, with the aim ofrnlaying down a mechanism to alleviate economic loss as a result of road accident. Thernimplementation of this legislation will affect the insurance industry. In the literature, the lawrnhas been practiced for several decades in most countries, but imposes significant impact onrninsurers’ performance. There are two views about its implementation, the first one isrncompulsory insurance is a social insurance and the government control the entire activities;rnpremium tariff, claim settlement process, policy terms and conditions and the wholernenforcement activities in order to achieve its purpose. The other counter argues andrnadvocates private insurer’s involvement in compulsory insurance implementation underrnminimum government control. Despite the law enforced recently in Ethiopia, this paper try tornassess the implementation of CTP motor insurance and analyze stakeholder’s level ofrnawareness towards CTP insurance. The study considers both primary and secondary data inrnorder to examine implementation of the legislation in achieving its objective and analyze thernattitude and perceptions of stakeholders; insurance officers and CTP insurancernpolicyholders. To address the research problem, both quantitative and qualitative researchrnapproaches were used. The research findings indicate CTP insurance has positive result torninsurers and IFAA. However, fairness of premium tariffs and uniform claim settlement were arnchallenge and awareness of parties involved in the process had wide gap. IFAA performancernto utilize the fund as planned also very low. In general CTP proclamation enforcement failedrnto address the intended result and lack of awareness had considerable impact on policyrnimplementation. Thus, both the government and insurance association should activelyrnparticipate in the awareness creation and cooperation between parties involved in thernimplementation process will address the problems

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