New premiums for commercial vehicles come into force Monday and insurance companies say it's because the previous low tariffs made them run at a loss. The Chief Executive Officer of Ghana Insurers Association, Mr. Atsu Menyawovor, confirmed to Joy FM Super Morning Show host Kojo Oppong-Nkrumah that the new rate will take effect today, Monday May 10, 2010 to save the insurance industry from collapsing. “Seriously, you can’t imagine it, the motor insurance business is so unprofitable…the motor portfolio is running at a loss,” Mr Menyawovor explained. He mentioned other reasons that necessitated the review to include the increasing cost of claims due to the increasing spate of accidents on the roads caused by unsafe road network resulting in deaths and injuries. In this instance, “claims overrun the premium charge,” he noted. Secondly, he attributed the increase to the general cost of operations which has gone up since the last review in 2002. He also explained that although, statutorily, they are obliged to contribute to the National Road Safety Funds and the National Health Insurance Scheme, these were not factored in the premium charged. In an answer to a complaint by the Minister of Transport, Mr Mike Hammah, that his outfit was not consulted, he remarked, “I am not sure whether we are obliged to consult them (the ministry).” On drivers’ agitation and threats to increase their fares, Mr Menyawovor said their action is untenable because the increment, according to their (insurance companies’) calculation should not attract new transport fares. “How much are we talking about?... let’s take a Maxi bus load with 70 passengers travelling from Accra to Kumasi and putting those passengers’ lives at risk, how much are we asking for under this new review, it is just GH¢1.15 a day.” The drivers also asked the insurance companies to seal leakages like ‘brokers' in the system and 'undercutting’ in their operations as a way of increasing their revenue, but this Mr Menyawovor said was considered as part of the review. “This review that we have done has also taken account of all the so-called leakages…the National Insurance Commission will not approve the tariff without serious queries on various aspect of the proposal.” However, he said the insurance companies are ready to sit down with all stakeholders to explain the “compelling” reasons that forced the premium increase. He said all insurance companies have been asked to only apply the approved tariff uniformly. Meanwhile, the Ministry of Transport is convening a meeting with the National Insurance Commission and representatives of transport unions to discuss the issue. Story by Isaac Essel,Myjoyonline.com,Ghana