In this era of globalization, where no country operates independently, intensifying bilateral and multilateral political and socioeconomic cooperation is more of a necessity. In order to facilitate peaceful cross-border vehicle mobility and expedite trade connectivity among countries, following a systematic approach is of paramount importance in resolving vehicle accidents.
The Yellow Card Scheme, established through a Protocol signed by heads of state and government in 1986, aims to provide compensation for damage or injury resulting from interstate traffic accidents. It offers guarantees similar to those mandated by the laws of participating member states, ensuring coverage for property damage, bodily injuries, medical expenses, and legal liabilities in the event of a road traffic accident in a foreign member country.
Prior to the introduction of the Common Market for Eastern and Southern Africa (COMESA) Yellow Card insurance scheme, which provides regional motor vehicle insurance for third-party liability coverage and compensation for medical expenses in the event of a road traffic accident, resolving vehicle accidents and their resulting damages was challenging. With the implementation of this insurance scheme, COMESA can easily provide compensation for those affected by vehicle accidents, allowing the vehicles to return to their country of origin.
Since the Yellow Card insurance scheme is applicable in all COMESA member countries and beyond, vehicle drivers are expected to hold and show the Yellow Card before crossing the border of a country where an accident occurred. This allows vehicles to transport goods across borders with only the Yellow Card as proof of insurance coverage. In other words, the Yellow Card can serve as proof of insurance.
Vehicle owners are required to appear in person at local insurance companies to buy premiums based on the vehicle they have for a given accident or damage caused by their drivers. Accordingly, commercial vehicles receive insurance coverage. This system operates under the insurance law and liability of the land.
Local insurance companies are mandated to provide insurance coverage for accidents within their localities by themselves, but when an accident occurs beyond borders, they provide coverage as per the information they receive from COMESA Yellow Card scheme offices. In short, the task of COMESA office is facilitating conditions.
To contribute to the Yellow Card insurance scheme, local insurance companies collect premiums from customers crossing borders and advise them to obtain the Yellow Card, which they can obtain from COMESA offices for their liability coverage in case of accidents. If the premiums collected from vehicle owners may not be enough to cover the liability of a given accident, the insurance company can cover it together with its reinsuring company.
The Yellow Card system facilitates easy movement of vehicles across borders, accelerating trade and social interactions within COMESA member countries. This system has streamlined the process for vehicles involved in accidents, ensuring prompt compensation and allowing them to return to their country of origin.
The Yellow Card Scheme operates in 13 COMESA and non-COMESA member states, with over 250 insurance companies issuing Yellow Card covers. In the 2021-2022 periods, the scheme processed over 720 claims, including one of the largest claims in the Democratic Republic of the Congo totaling $400,000. The scheme has issued over 256,000 cards, generating premium income exceeding $14.7 million, according to COMESA.
Yellow Card trucks are commonly used in the region, with over 1000 passing through Ethiopia and Djibouti daily. The scheme covers emergency medical expenses and third-party property damage where available in member nations.
A reinsurance pool with assets exceeding $15 million provides reinsurance coverage and clearing house services to member insurance companies. Non-COMESA drivers from countries like Mozambique or South Africa can obtain Yellow Card coverage through business agreements.
The COMESA Yellow Card Scheme has been digitalized since November 2018. The Digital Yellow Card (YC) system includes a mobile app and a helpdesk system: Digital Yellow Card Mobile App, which provides access to emergency medical coverage and real-time information for motorists, law enforcement, and other stakeholders, and Digital Yellow Card Helpdesk System, which allows users to submit queries and requests via email, phone, or in person.
Since December 2020, the Digital Yellow Card platform has been used to issue Yellow Cards, improving claims operations and overall scheme effectiveness. The RI Pool, established in 1998, offers reinsurance coverage for claims above $15,000 and clearing of claims settlement transactions for InterBureaux claims.
Despite high demand from non-COMESA/SADC countries, the Yellow Card scheme faces challenges due to disparate third-party insurance systems in the region. Issues such as delays in claims processing, forgery of Yellow Cards, low liability limits, and inconveniences to vehicles involved in accidents persist. On the other hand, COMESA Yellow Card offices should further be strengthened with a view to providing efficient services.
To address these challenges, the Yellow Card scheme must focus on full automation of claim operations, combat forgery, increase liability limits, and improve communication with key stakeholders like traffic police and border authorities. The premium payment asked by some insurance companies is still minimal, which needs improvement as it eases the burden of reinsuring companies. On the other hand, the structural arrangement of COMESA’s country offices should be improved to further strengthen the service they provide.
Implementing digital mechanisms such as a mobile application, which is in process, as well as the Electronic Yellow Card and other systems are critical in terms of improving this insurance scheme, which will have a greater contribution to realizing Agenda 2063: the Africa We Want.
Editor’s Note: The views entertained in this article do not necessarily reflect the stance of The Ethiopian Herald
BY GIRMACHEW GASHAW
The Ethiopian Herald December 15/2014
