Zambia’s current flurry of road traffic accidents represents a growing economic problem, as well as slowly evolving into a public health concern; while posing an increasingly challenging social question. In context, the economic costs associated with road traffic accidents (fatalities and injuries aggregated) is currently estimated to be in the margins of $500 million per annum. All things considered, this is represents around 2% of our country’s Gross Domestic Product (GDP); or 1% of the country annual budget for the fiscal period 2019 and represents 62.5% of the total expenditure proposed in respect of the health sector, or 77% of the total proposed expenditure in respect of road infrastructure; while it matches the total expenditure proposed in respect of the agricultural sector. These like for like comparisons are indicative enough of the scale of the problem road traffic accidents occasion upon our young, struggling economy.

Important to note is that these costs inherently consist in loss of productive human capital, loss of income, increased burden on the healthcare and welfare systems.

A recent study carried out by the World Bank (Road Deaths and Injuries Hold back Economic Growth in developing Countries, January 2018) asserts that countries which will fail to sufficiently invest in road safety could potentially miss out on GDP growth in the range of 7 % – 22% over a 24 year period – being 2014 – 2038, with developing countries most at risk. The same study reiterates that a 10% reduction in road traffic fatalities could increase per capita real GDP by close to 4% over the same period. It is also envisaged that halving the number of deaths and injuries arising from road traffic accidents could see countries like Zambia potentially add an extra up to 7% in GDP growth over the projected period 2014 – 2038.

Against this ominous background, I am of the fundamental belief that Zambia has an even greater incentive to take robust, drastic remedial measures to begin to correct the otherwise impending and ever growing catastrophe.

It is important to appreciate that in all road traffic accidents, there are Three (3) principal contributing factors: the driver, the vehicle, road and environment, with the driver being cited as the single biggest risk factor in 95% of all road traffic accidents occurring. Therefore, it can be concluded that 90% of all our efforts, aimed at mitigating the ever increasing carnage arising from road traffic accidents, must be built around managing the risk associated with the driver component in the motor insurance policy risk assessment triangle. Of course, the government of the Republic of Zambia appears to be making strides in making the general driving environment (being roads) better. However, more can and should be done particularly around the issue of expanding lanes in road traffic accidents’ hotspots, improve lighting along our roads, clearly marking out and highlighting potential blind spots across our vast road network, and ensuring that all foreign equipment which can distract or impair the vision of a driver, such as advertising equipment, are repositioned or relocated to areas where such will not interfere with the behavior of the driver.

Nonetheless, the reason focus is primarily being pinned on the insurance arm as being the most critical structural component for managing the risk around road traffic accidents is because insurance companies effectively determine the price at which an individual will be allowed onto our public roads given the underlying risk such an individual may pose. Therefore, how insurance companies assess and underwrite the risk posed by a driver will have eventual consequences on the overall structure and extent of the risk of road traffic accidents on our public roads.

Overview of motor insurance policy risk assessment and underwriting structure

From the way insurance companies are presently writing motor insurance policies, it is patently clear that they are not focusing on the inherent risk posed by the driver – the single biggest risk contributing factor to road traffic accidents everywhere in the world. Currently, insurance companies are focusing on less than 3% of what the total risk is worth – the vehicle. And even then, most insurance companies are not asking some of the most critical questions they ought to be asking around the risk associated with the vehicle. In fact, results of my Thesis did reveal a glaring, perhaps inadvertent, failure by some of the country’s major insurers ( with some completely refusing to share their risk assessment and underwriting benchmark information) to take a much more robust and holistic, yet business friendly approach towards managing motor insurance risk.

For example, when a vehicle is modified – e.g. lowered suspension, turbo charged and fitted with other auxiliaries such as rear wing or spoiler, it changes the structure of the risk upwards, as opposed to a standard fitted vehicle. A modified vehicle in the manner intimated will usually mean the natural mechanical balance of the vehicle may be in peril given its body side. Additionally, a modified vehicle will also give you a glimpse of the behavioral tendencies of the driver; such as the propensity to driver the vehicle at higher than normal speed. Yet, insurance companies are simply not asking about this sort of information.

In my academic Thesis, I have made specific reference to Associated Factors i.e. a driver’s behavioral characteristics such as those depicted in one’s history of motoring accidents, convictions such as speeding, drunk driving, crossing red lights, dangerous driving; as well as a driver’s intended annual driving distance in any given year. These become fundamentally compelling risk assessment and underwriting benchmarks which every insurance company should be duty – bound to think about in their motor insurance policy issuance decisions. What is profoundly disturbing is that insurance companies are patently not thinking about these risk factors when issuing motor insurance policies. It thus means that at the moment, the biggest risk factor on our roads – the driver, is currently going unmanaged and unmitigated; and the results are all too plain for all of us to witness: over 7,000 road traffic accidents, nearly 500 dead and an economic cost spanning close to $500 million in 2018 alone.

It is important to mention that the road safety problem is not one insurance companies will naturally want to be concerned about. They are in the business of making money and profit will be foremost on their agenda, however the scale of the perils on our public roads. It is, therefore, incumbent upon the government, through the appropriate regulatory agencies, to ensure that enough legal, regulatory and working functional frameworks exist to heighten the balance of responsibility on the part of insurance companies in the arena of road risk management. Granted, legislation exists around stipulating road traffic offences as per Roads and Road Traffic Act, CAP 464 of the Laws of Zambia; particularly Part XIII and the accompanying sections thereunder. We also have the Insurance Act, CAP 392 of the Laws of Zambia; which does not quite set out the framework of engagement in the area of risk assessment for insurance companies. Further to this, the Pensions Scheme Regulation Act, No. 28 of 1996 – while it provides for the institution of the Pensions and Insurance Authority (PIA) and its function, the PIA does not have a specially designated framework requiring insurance companies to demonstrate adherence to certain critical KYC benchmarks in respect of motor insurance policies. This regulatory vacuum across multiple fronts creates so much room for excessive risk taking on the part of both insurance companies and brokers when it comes to writing motor insurance policies. We need to close this gap urgently.

Specifics of motor insurance policy risk management proposals

In view of the foregoing, one can reasonably conclude, that the human component (driver), already identified as the single biggest contributor to the structure of risk on our public roads, is exposed and unmarked. This is evident in the liberal attitude towards motor insurance policy risk by insurance companies, aided by the clear absence of coordination in regulation across multiple regulatory fronts.

Thus, proposals for the changes in the following areas arise:


There is need for the harmonization of existing regulatory frameworks for purposes of delivering specific and increased but business friendly requirements for insurance companies and brokers to demonstrate adherence to certain, identifiable KYC fundamentals around the driver and the vehicle. This could mean insurance companies and brokers be required to demonstrate that they have inquired and obtained principal knowledge in respect of the prospective insured, and have knowledge in respect of the age of the driver, the occupation, the type of license held by the driver, the length of period for which the driver has had their license, marital status of the driver, the proposed use of the vehicle (i.e. whether social, domestic and pleasure and/ or work), history of accidents and convictions, proposed annual mileage. Insurance companies and brokers must also be required to demonstrate that they know enough about the vehicle to be insured i.e. modifications – lowered suspensions, installed turbo chargers, and other racing auxiliary equipment on the vehicle.

The other risk assessment imperative we need to be worried about is the driving options component on insurance policies. In Zambia, it seems anyone with a valid driving license is allowed to drive other cars within their license category, provided the vehicle is road worthy and has both insurance cover and road tax. However, it is important to note that this treatment exacerbates the risk on our roads needlessly. The option to drive other cars should be an express inclusion or exception attached to an individual insurance policy and must speak to the overall risk profile of the driver. It is hazardous to allow young, newly licensed drivers; or indeed drivers with a determinably questionable driving record to drive other people’s cars.

The other area of focus may have to be the treatment of pool insurance policies such as those taken out by public transport service companies like Power Tools, Euro Bus Services, Mazhandu Family Bus Services, Flash and others. Regulation must be clear regarding the disaggregation of individual drivers’ risks and determine the overall contribution each driver makes to the risk profile of the pool policy. In the event that one driver within the pool policy has an accident or motoring conviction, this must accordingly reflect upon the overall risk profile of the pool policy.

These imperatives are critical in mapping the risk profile of the driver and will allow insurance companies to charge risk reflective premiums for various forms of cover to difference insured drivers.

Formulation and Harmonization of Risk Management Standards

This process is closely related to the aspect of regulation. And without being overly prescriptive, it is essential that institutional regulatory stakeholders work towards a codified minimum risk assessment and underwriting criterion, with insurance companies and brokers expected to demonstrate adherence to these for purposes of ensuring uniformity across the risk assessment and underwriting spectrum. This could mean critical information pertaining to the driver and the vehicle become mandatory points of inquiry by insurance companies before insurance cover may be issued.

Integrated Coordination

The formulation and harmonization of standards can and be made more meaningful through the development and maintenance of a centrally managed integrated information and coordination management system. This could facilitate the capturing, holding, maintenance and exchange of critical information among institutional players such as the police, RTSA and insurance companies. This could mean having a centrally managed depository system where the police and RTSA must be obligated to log all records of individual drivers’ accidents and other motoring convictions. The mandate will be for insurance companies to make these bits of critical information points of mandatory inquiry while the policy proposer must have a legal obligation to fully disclose any history of accidents and motoring convictions to the insurance company, where non-disclosure should result in the voiding of an entire insurance policy, as well as forming grounds for a criminal offense bordering on fraud. These measures are pivotal in ensuring sound risk management in delivering sound road safety.

License Endorsements

This is essentially the driver’s history of accidents and motoring convictions as appearing on their license records for a designated period of time. During this designated period of time, insurance premiums must fully reflect these endorsements. Note that his insurance premium punitive mechanism must be accompanied by a definitive and commensurate fine and a prescribed set of license penalty points (under a License Penalty Points System). For example, 3 penalty points for minor traffic violations such as speeding and traffic lights violations, while more serious violations such as drunk driving and dangerous driving could attract 4 penalty points. We could adopt a system where a total of 12 active penalty points on a driver’s license at any given time should automatically result in the revocation of license and suspension from driving for a period not less than 12 months, after which drivers should be required to take a mandatory fresh driving test, supported by behavioral rehabilitation sessions. This will encourage increased compliance to road safety rules.

Electronic Pricing System (EPS)

In insurance, excessive risk taking arises, in part, when substantive risk variables are overlooked by an underwriter as a way of securing an easy sale. This trend becomes even more pronounced when and where policies are manually written. However, an EPS for policies would, to a greater extent, eliminate arbitrariness in the manner risk is assessed and priced. An EPS will give a near enough representation of the true nature of the risk. Where a given risk falls outside the requirements of an EPS, it leaves room for underwriters to manually write the policy, except in this instance, an indication of the potential hazard surrounding a risk would have been accounted for.

Underwriting Skills Development

There is need to accelerate the skills set of principal insurance officers, particularly at risk assessment and underwriting level. This is important so that Zambia’s insurance business model fully integrates the need for road safety conscious risk assessment and underwriting. This is not to decimate the invaluable contributions which other interventions such as road safety awareness programs bring to the table, but rather a recognition arising from the understanding that the human component has more than sufficiently been shown to be broadly responsible for road traffic accidents and fatalities, not just in Zambia but on a world wide scale.


Road safety is a multifaceted problem. It, therefore, requires the input and contributions of all identifiable stakeholders – institutions and individuals alike, to demonstrate a heightened awareness of the scale of the problem; as well as tapping into existing opportunities to remedy the problem of road traffic accidents and fatalities.

Fundamentally, it is the human component which constitutes the biggest risk factor in road safety. Thus, future road safety endeavors must be built around building capacity to manage this risk; and the greatest opportunity for this exists with insurance companies playing a pivotal role in managing this risk at source, before an insurance policy is issued.

With reforms in this direction, it is possible for Zambia to substantially reduce the risks of road traffic accidents and fatalities, and evidently reduce the economic, social and healthcare costs associated with the same.

This Brief has been prepared and adapted from Anthony’s academic work submitted to the Copperbelt University’s School of Business – Department of Business Administration, Marketing and Economics; in partial fulfillment of the award for the degree in Business Administration. Anthony can be reached on [email protected] and +260-978 13 8847