On Wednesday, June 11, Godfrey Kabera, the State Secretary in charge of public assets at the Ministry of Finance and Economic Planning, presented new draft laws on accident compensation to the Rwandan Parliament.
During a General Assembly session, the Chamber of Deputies approved the foundation of the draft law focused on accident-related compensation payments. This legislation aims to merge two existing laws, addressing inconsistencies to create a streamlined and equitable system for awarding compensations.
Under the proposed regulations, compensation will now be based on untaxed income, specifically Rwandan Francs 60,000 per month or Rwandan Francs 2,000 per day, as stipulated by Rwanda’s tax laws.
This revision follows a landmark 2016 Supreme Court decision mandating that accident victims, even those without documented earnings, be compensated based on an averaged daily income of Rwandan Francs 3,000 — equivalent to Rwandan Francs 90,000 per month.
Nevertheless, insurance companies expressed concerns, criticizing the set amounts as overly high, which they argued undermined their operational viability and the long-term sustainability of Rwanda’s insurance sector.
Explaining the reasoning behind the proposed legislation, Kabera highlighted its aim to clarify compensation calculations for individuals without documented income, primarily targeting workers in informal employment sectors.
He explained: “The law stipulates that compensation for accident victims unable to verify their earnings will be assessed based on untaxed income thresholds of Rwandan Francs 60,000 monthly. Additionally, the regulation aligns with the legally recognized working age range of 16 to 65 years.”
Parliament underscored the significance of these draft laws, forwarding them to a specialized committee for thorough review before finalization.
The Driving Force Behind the Amendment
In 2020, insurance companies, represented by the Association of Insurers in Rwanda (ASSAR), petitioned the Supreme Court to enforce a minimum wage provision outlined in Rwanda’s 2018 labor legislation.
These labor laws mandate that the Minister of Public Service and Labor establish minimum wage benchmarks based on job categories. However, the lack of enforcing guidelines has created legal ambiguities.
Insurance company representatives argued that the absence of an official minimum wage has led to confusion in court cases involving compensation claims, with past rulings relying on the 2016 precedent of a daily benchmark of Rwandan Francs 3,000.
As a resolution, this new law seeks to introduce a definitive metric for assessing compensation for accident victims without income proof, offering balanced protection for both claimants and insurers alike.
Rwanda takes significant strides toward reforming its accident compensation model to ensure fairness for victims while safeguarding the financial integrity of insurance institutions.