In a few weeks,
the proclamation that compels all vehicle owners to
have third party motor vehicle insurance will mark
its third year.
Signed into law by
the president on January 9, 2008, this proclamation
was meant to enter into force immediately after its
publication in the Federal Negarit Gazette,
according to Article 38. However, legislating laws
is one thing; enforcing them is another.
Prior to its
signing, the introduction of Compulsory Vehicle
Insurance against Third Party Risks (CVIATPR) in
Ethiopia had been long overdue, if not historically
precarious. More than 38 years had passed since the
idea of the scheme gained public attention,
following the promulgation of an Insurance
Proclamation, in 1970. Even after the latest
proclamation (No. 559/2008), enforcement of the
scheme is still lingering, extending Ethiopia’s
“CVIATPR cover free” years to 41; a situation,
perhaps, unusual in the rest of the world.
While the effort
of legislating the proclamation is beyond doubt a
commendable job, it is distressing to see the
three-year deferral of its implementation – heaven
only knows for how many more years it may continue –
in a country with a soaring road accident rate.
In almost all
countries, laws require all owners and drivers of
vehicles to have third party insurance. It is a form
of liability insurance that pays for damage to
someone else’s property or for injury to other
persons resulting from an accident for which the
insured are judged legally liable. However, this
insurance policy does not pay for collision damage,
fire, or theft of the policyholder’s own vehicle.
There are many
forms of motor vehicle insurance, varying not only
in the kinds of risks covered, but also in the legal
principles underlying them. Ethiopia has come a long
way in introducing the particular law to protect
third parties from possible injury and damages.
With the advent of
the Insurance Proclamation, the Insurance
Controllers Office (ICO) was keen to deal with all
insurance matters right after its creation, but
waited for a foreign expert to study the CVIATPR
scheme and make recommendations to the government.
In 1971, UNCTAD
provided one of its insurance experts, K. Friedman,
an American national, who started drafting the
CVIATPR instrument while working on other insurance
related matters. To its credit, UNCTAD still
ardently supports developing countries in insurance
replaced by a Swedish insurance expert, C. O.
Enhagen, who largely finalised the work. He
recommended a scheme based on the principle of a
“no-fault” system based on a similar scheme
practised in Sweden for 20 years.
Under a “no-fault”
scheme, the claimant does not have to establish
negligence on the part of another in order to
receive compensation. The compensation or benefits,
as provided in the scheme, are payable to victims
irrespective of the driver’s fault. Relief is also
given to victims of hit-and-run accidents where the
offending vehicles are not identified.
system does not assure complete justice to parties
who would normally be plaintiffs and defendants.
However, it provides a type of average justice for
all who might be injured as a result of motor car
accidents and attempts to provide this justice
speedily and economically. The essence of the system
It is a
compromise, because it provides for prompt payment
of medical bills and other actual expenses of the
injured person without requiring proof that any
driver was at fault in the accident, but it does not
allow the injured person to recover money for pain
and suffering unless a “serious injury” was
sustained. Where the “fault” system applies, the
victim has to prove that the accident was caused by
the fault of the driver (or someone else). Both
systems are prevalent in different countries of the
road use management, and the responsibility to put
the regulations through hinges upon the Road
Transport Authority (RTA) under the Ministry of
Transport and Communications (MoTC). The scheme
establishes statutory insurance under which powers
and responsibilities are to be exercised by parties
to the scheme, the authority, and licensed insurers.
The leading role played by the former Ministry of
Commerce and Industry (MoCI) resulted from the ICO
being under its control. The insurance firms
operating then, most of who had foreign insurance
advisors, also lent a hand in the effort.
As a result of the
change of government that came about after the 1974
Ethiopian Revolution, the success of the CVIATPR
scheme drafted by the ICO was hampered. The
ownership of the financial institutions was
transformed from private to public, subjecting the
people of Ethiopia to the evils of monopoly. The
supervisory role of insurance firms was also shifted
from the ministry to National Bank of Ethiopia
(NBE), which remains the case today. The CVIATPR
returned to square one.
initiative, the Ethiopian Insurance Corporation
(EIC) and the concerned ministry resuscitated the
idea of CVIATPR much later, during the Derg regime.
Piles of studies and recommendations on the scheme
were handed over to government officials at the
time, but, the documents were fated to only warm
shelves until the demise of the regime, in 1991.
Another 16 years elapses before the kickoff of the
CVIATPR legislation, when a new proclamation was
issued, in 2008.
Ethiopia is among
the record holding countries in pedestrian
manslaughter and serious bodily injuries caused by
motor accidents; the value and significance of the
CVIATPR for the
victims is more than obvious. Due to an annual increase in the number
of motor vehicles, the reluctance of drivers to
strictly adhere to traffic regulations, the lenient
traffic control system (driving under the influence
of alcohol and khat), and substandard roads, the
consequential losses of life and property in motor
accidents are horrendous. It is urgent to implement
the long-awaited CVIATPR legal instruments in order
to provide victims with relief.
Ethiopia is the only member in the Common Market for
Eastern and Southern Africa (COMESA) club lacking
third-party insurance. It is possible that Ethiopia
could be second to none in the world still dawdling
without CVIATPR. Eritrea, a new member to the UN,
introduced the scheme in 2002, with a strict
liability system, including compulsory seatbelt
COMESA’s “Third Party Motor Vehicle Insurance Scheme,” popularly known
as the “Yellow Card,” has become one of the most
important instruments of facilitation of movement of
vehicles, goods, and persons in both the COMESA
region and outside. The scheme was introduced in
July 1987, and its main objective is to provide a
guarantee for road accident victims, fair and prompt
compensation for damage or injury they may have
sustained as a result of road traffic accidents, and
facilitate the movement of vehicles between member
In this scheme, a motor vehicle must buy and hold the “Yellow Card,”
(in Europe it is called a “Green card”) before
crossing the border of COMESA or non-COMESA states.
It is crucial to enforce the 2008 proclamation, which will not allow
drivers to be on the road unless they have a valid
policy from a licensed insurer that pays
compensation to victims in case of the loss of life,
bodily injury, damages to property, and emergency
medical treatment caused by the insured vehicle.
“No person shall drive or cause or permit any other person to drive a
vehicle unless he has a valid vehicle insurance
coverage against third party risks in relation to
such vehicle,” states Article 3 (1) of the
That is the minimum cover that a vehicle owner or driver is obliged to
obtain, by law. Failure to abide by the prescribed
requirements of the proclamation and ensuing
regulations is contravening the law and result in
A fine between 3,000 Br and 5,000 Br or up to two years of imprisonment
is stipulated in Article 37 of the proclamation.
Depending on the gravity of the offence, some
countries suspend the offender’s driver’s licence,