Abstract:
The economic and social damage due to motor vehicle is intensifying alarmingly. Among others, one of the measure took by the government of Ethiopia is the recent development of legislation “Vehicle Insurance Against Third Party Risks Proclamation”, with the aim of laying down a mechanism to ease economic loss as a result of road accident. The implementation of this regulation will affect the insurance industry. The law has been practiced for several years in most countries, but enforces significant impact on insurers’ performance. This paper tries to assess the implementation of compulsory third party motor insurance and analyze stakeholder’s level of awareness towards compulsory third party insurance. The study considers both primary and secondary data in order to examine implementation of the legislation in achieving its objective and analyze the attitude and perceptions of stakeholders, to conduct this analysis; SPSS version 20 software tool is used. The data are presented using tables. To address the research problem, both quantitative and qualitative research approaches were used. The research findings result indicate there is disagreement on vehicle insurance against third party risks policy in matching the objective of protecting the insured from insurers. Again, fairness of premium tariffs and uniform claim settlement were a challenge and awareness of parties involved in the process had wide gap. In general vehicle insurance against third party proclamation enforcement failed to address the intended result and lack of awareness had considerable impact on policy implementation. Thus, both the legislation advised to amend the policy to satisfy parties involved in the implementation process will address the problems.
