An insurance brokerage is set to introduce a new daily premium for matatu industry operators.
LGT Insurance Agency — the insurance brokerage arm of the local private equity fund Lions of Good Times (LGT)—said the product will facilitate matatu operators to make daily premium payments via a mobile payment system. The PE firm has a market capitalisation of Sh500 million.
“It is very difficult for them (matatu operators) to be paying a monthly insurance premium of Sh9,000 at minimum. What we want is to venture into this business and aid them in paying a daily fee starting from Sh305,” said LGT chief executive Biwott Tirop.
For a 14-seater matatu, the agency will be paying a minimum of Sh9,000 in advance to the underwriter since insurance companies usually take monthly cover.
However, they have to pay Sh3,000 registration fee that partly acts as security.
“We are making it flexible for the matatu operators. We are taking that risk to pay for them in advance then we collect our money on a daily basis,” said Mr Tirop.
Industry data shows motor vehicle insurers are still unable to make money.
Between 2009 and 2016, the insurance class recorded a net underwriting loss of Sh2.1 billion.
The net underwriting loss stood at Sh2.4 billion in 2015, making it the worst year for the business class.