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Insurance Business in Rwanda: The Impact of Covid-19 Pandemic on Insurance Business


The global outbreak of Covid-19 (coronavirus) triggered Rwanda’s lockdown and this put most of the businesses at a standstill. Lockdown in Rwanda was effected on 21st March, this has affected not only businesses in Rwanda but also movement of people along with their goods and thus affecting the general trend of trade on the market scale of the country. The directives made in line with prevention of spread of Covid-19, further steered a significant reduction in commercial activity, rise in unemployment rates and future unforeseeable drop in taxes and revenues.

Implications for insurance
The regulations that govern insurance in Rwanda as enshrined in Decree Law n° 20/75 of 20/06/1975 as modified and complemented to date and Regulation Nº12/2009 of 13/10/2009 on Market Conduct Requirements for Insurers and Insurance Intermediaries considers insurance business to be founded on the principle of utmost good faith. This implies that good faith is the utmost principle adopted while the conduct of all insurers and insurance intermediaries shall abide to the same principle. In this article we shall be able to appreciate the legal implications associated to insurance business that are as a result of Covid-19.

Possible Insurance Coverage that Might Occur After or During Covid-19 Pandemic

Looking at/Considering the current situation of lockdown which is as a result of the Covid-19 outbreak, unforeseeable changes on insurance policies may occur and this shall lead to exclusion of some insurance policies by some insurers on businesses and liabilities. The current policy terms and conditions for different types of insurance may therefore give rise to claims for coverage of the losses and expenses resulting from the lockdown. Policy holders shall raise a lot of claims against the insurance companies for recovery of losses and damages suffered during the period of Covid-19 lockdown. To critically analyze the current situation on insurance coverage in Rwanda, the study shall be based on a number of distinct types of insurance policies.

Loan Insurance

This kind of insurance coverage is available to policyholders with a loan and desire to insure such a loan in case of death or disability to clear their loan. Under such circumstances, the insurer takes over the payment of such a loan, however it’s not clear whether in such period of Covid-19 a lockdown is considered as disability to settle a loan by the policyholder. Foreseeable claims ought to emerge under loan insurance coverage. The question shall be whether disability includes insurable risks that are likely to impair the consumer’s ability to earn an income or meet the obligations under a loan agreement, for instance Covid-19 lockdown? In this case, Covid-19 lockdown is not considered as a disability to settle a loan, however a loan holder may request for a loan holiday from his or her financial institution. The policyholder should therefore be able to know his or her insurance coverage before claiming and under circumstances where such cover includes other insurance risks, then such claim may stand in light of Covid-19 lockdown.

Property/ Business insurance

It is quite obvious that most insurers are not interested in pandemics and to sustain a claim against them, the policyholder needs to have in place better insurance coverage and in most policies in Rwanda, insurance coverage do not include pandemic as part of damage that needs to be covered by the insurer. In this case the policyholder in Rwanda cannot sustain a claim against the insurer in light with damages or losses that are as a result of Covid-19 lockdown.

Third Party Liability insurance

This kind of insurance coverage aims at indemnifying the third party who has suffered loss, damages as a result of the policyholder. It is foreseeable that during this period of Covid-19 lockdown, many claims shall arise against policyholders and insurers for a breach of a legal or professional duty which includes third-party, professional, public and product liability. For instance, in line with the professional liability policy, a third party is required to prove financial and economic loss against the insurance policyholder to the insurer. This implies that there is a likely of claims that are as a result of financial loss caused by COVID-19 giving rise to professional liability claims against the policyholder to his or her insurer. This shall therefore call for a direct privity against liability insurers as granted to third parties by the Insurance Contract. Such financial loss may also steer to third-party claim against directors and officers of companies that have failed to meet their contractual obligations and employment practice liability insurance claims.

Considering directors and officers Liability of the company, many directors and managers of the company have made terrible decisions during Covid-19 pandemic and these include dismissing some of the employees, shutting down the companies among other. Such decision might have caused damages, financial and economic losses to some people. In such circumstances, claims are mostly likely to arise against them and in this case the insurer shall have to cover for such claims.

At MK Associated Advocates we deeply urge insurers to adopt mediation as a tool for settling any insurance dispute.

"The content of this Article is intended to provide a general guide on the subject matter. Specialized legal advice should be sought about your specific circumstances and legal issues."